Vulcan Materials (VMC) Flagged As A 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 Vulcan Materials ( VMC) 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 Vulcan Materials as such a stock due to the following factors:

  • VMC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $84.2 million.
  • VMC has traded 1.1 million shares today.
  • VMC is trading at 3.10 times the normal volume for the stock at this time of day.
  • VMC 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 VMC:

Vulcan Materials Company produces and sells construction aggregates, asphalt mix, ready-mixed concrete, and cement primarily in the United States. The company's Aggregates segment offers crushed stone, sand and gravel, sand, and other aggregates, as well as related products and services. The stock currently has a dividend yield of 0.4%. VMC has a PE ratio of 53.2. Currently there are 4 analysts that rate Vulcan Materials a buy, 2 analysts rate it a sell, and 5 rate it a hold.

The average volume for Vulcan Materials has been 1.1 million shares per day over the past 30 days. Vulcan has a market cap of $8.1 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.35 and a short float of 3.4% with 2.95 days to cover. Shares are up 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 Vulcan Materials as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • VULCAN MATERIALS CO reported significant earnings per share improvement 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, VULCAN MATERIALS CO turned its bottom line around by earning $0.16 versus -$0.42 in the prior year. This year, the market expects an improvement in earnings ($0.86 versus $0.16).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Construction Materials industry average. The net income increased by 59.8% when compared to the same quarter one year prior, rising from $28.77 million to $45.97 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.3%. Since the same quarter one year prior, revenues slightly increased by 7.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has significantly increased by 185.81% to $27.87 million when compared to the same quarter last year. In addition, VULCAN MATERIALS CO has also vastly surpassed the industry average cash flow growth rate of 4.87%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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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