Trade-Ideas: Rockwell Collins (COL) 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 Rockwell Collins ( COL) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Rockwell Collins as such a stock due to the following factors:

  • COL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $42.1 million.
  • COL has traded 84,886 shares today.
  • COL traded in a range 323.3% of the normal price range with a price range of $2.29.
  • COL traded above its daily resistance level (quality: 167 days, meaning that the stock is crossing a resistance level set by the last 167 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on COL:

Rockwell Collins, Inc. designs, produces, and supports communications and aviation electronics for commercial and military customers worldwide. It operates in two segments, Government Systems and Commercial Systems. The stock currently has a dividend yield of 1.6%. COL has a PE ratio of 16.9. Currently there are 8 analysts that rate Rockwell Collins a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Rockwell Collins has been 657,800 shares per day over the past 30 days. Rockwell Collins has a market cap of $10.4 billion and is part of the industrial goods sector and aerospace/defense industry. The stock has a beta of 0.59 and a short float of 5.1% with 11.16 days to cover. Shares are up 4.5% year-to-date as of the close of trading on Tuesday.

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 Rockwell Collins as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, increase in stock price during the past year, expanding profit margins and growth in earnings per share. 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 came in higher than the industry average of 1.3%. Since the same quarter one year prior, revenues rose by 11.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Net operating cash flow has increased to $174.00 million or 33.84% when compared to the same quarter last year. In addition, ROCKWELL COLLINS INC has also vastly surpassed the industry average cash flow growth rate of -19.54%.
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • 39.40% is the gross profit margin for ROCKWELL COLLINS INC which we consider to be strong. Regardless of COL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, COL's net profit margin of 12.50% compares favorably to the industry average.
  • ROCKWELL COLLINS INC reported flat earnings per share in the most recent quarter. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ROCKWELL COLLINS INC increased its bottom line by earning $4.57 versus $4.15 in the prior year. For the next year, the market is expecting a contraction of 1.3% in earnings ($4.51 versus $4.57).

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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