SunTrust Banks (STI) Is Today's Storm The Castle Stock

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 SunTrust Banks ( STI) 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 SunTrust Banks as such a stock due to the following factors:

  • STI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $95.4 million.
  • STI has traded 1.5 million shares today.
  • STI is trading at 1.98 times the normal volume for the stock at this time of day.
  • STI 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 STI:

SunTrust Banks, Inc. operates as the holding company for SunTrust Bank that provides various financial services in the United States. The company operates in three segments: Consumer Banking and Private Wealth Management, Wholesale Banking, and Mortgage Banking. The stock currently has a dividend yield of 2.1%. STI has a PE ratio of 14.6. Currently there are 11 analysts that rate SunTrust Banks a buy, no analysts rate it a sell, and 11 rate it a hold.

The average volume for SunTrust Banks has been 3.1 million shares per day over the past 30 days. SunTrust Banks has a market cap of $19.8 billion and is part of the financial sector and banking industry. The stock has a beta of 1.48 and a short float of 1.5% with 3.08 days to cover. Shares are up 1.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates SunTrust Banks as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, good cash flow from operations, increase in net income and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 11.9%. Since the same quarter one year prior, revenues slightly increased by 4.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for SUNTRUST BANKS INC is currently very high, coming in at 90.89%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.31% is above that of the industry average.
  • Net operating cash flow has significantly increased by 208.73% to $318.00 million when compared to the same quarter last year. In addition, SUNTRUST BANKS INC has also vastly surpassed the industry average cash flow growth rate of -103.82%.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Commercial Banks industry average. The net income increased by 5.8% when compared to the same quarter one year prior, going from $377.00 million to $399.00 million.
  • SUNTRUST BANKS INC has improved earnings per share by 5.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SUNTRUST BANKS INC reported lower earnings of $2.41 versus $3.59 in the prior year. This year, the market expects an improvement in earnings ($3.04 versus $2.41).

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