Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. Trade-Ideas LLC identified Tesoro Corporation ( TSO) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Tesoro Corporation as such a stock due to the following factors:
- TSO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $139.8 million.
- TSO has traded 3.4 million shares today.
- TSO is trading at 1.88 times the normal volume for the stock at this time of day.
- TSO crossed above its 200-day simple moving average.
'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize on. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success. EXCLUSIVE OFFER: Get the inside scoop on opportunities in TSO with the Ticky from Trade-Ideas. See the FREE profile for TSO NOW at Trade-Ideas More details on TSO: Tesoro Corporation, together with its subsidiaries, is engaged in refining and marketing petroleum products in the United States. It operates in two segments, Refining and Retail. The stock currently has a dividend yield of 1.9%. TSO has a PE ratio of 18.5. Currently there are 6 analysts that rate Tesoro Corporation a buy, no analysts rate it a sell, and 5 rate it a hold. The average volume for Tesoro Corporation has been 2.9 million shares per day over the past 30 days. Tesoro has a market cap of $6.2 billion and is part of the basic materials sector and energy industry. The stock has a beta of 2.35 and a short float of 4.5% with 2.16 days to cover. Shares are down 15.5% year-to-date as of the close of trading on Monday. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. TheStreetRatings.com Analysis: TheStreet Quant Ratings rates Tesoro Corporation as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 7.7%. Since the same quarter one year prior, revenues rose by 34.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- TSO's debt-to-equity ratio of 0.66 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.75 is weak.
- TESORO CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, TESORO CORP reported lower earnings of $2.82 versus $6.20 in the prior year. This year, the market expects an improvement in earnings ($5.39 versus $2.82).
- The share price of TESORO CORP has not done very well: it is down 10.81% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- You can view the full Tesoro Corporation Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.