Trade-Ideas: Ametek (AME) Is Today's

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 Ametek ( AME) 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 Ametek as such a stock due to the following factors:

  • AME has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $53.2 million.
  • AME has traded 526,116 shares today.
  • AME is trading at 9.16 times the normal volume for the stock at this time of day.
  • AME 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.

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More details on AME:

AMETEK, Inc. manufactures and sells electronic instruments and electromechanical devices in North America, Europe, Asia, and South America. The company operates in two segments, Electronic Instruments Group (EIG) and Electromechanical Group (EMG). The stock currently has a dividend yield of 0.7%. AME has a PE ratio of 22.5. Currently there are 5 analysts that rate Ametek a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Ametek has been 796,400 shares per day over the past 30 days. Ametek has a market cap of $11.9 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.43 and a short float of 0.8% with 1.42 days to cover. Shares are down 7.8% 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 Ametek as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, expanding profit margins and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 7.8%. Since the same quarter one year prior, revenues rose by 10.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • AMETEK INC has improved earnings per share by 11.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, AMETEK INC increased its bottom line by earning $2.10 versus $1.89 in the prior year. This year, the market expects an improvement in earnings ($2.37 versus $2.10).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Electrical Equipment industry average. The net income increased by 12.3% when compared to the same quarter one year prior, going from $125.15 million to $140.59 million.
  • 37.68% is the gross profit margin for AMETEK INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.41% is above that of the industry average.
  • Net operating cash flow has slightly increased to $160.96 million or 2.64% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -28.35%.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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