Storm The Castle Stock Of The Day: Umpqua Holdings (UMPQ)

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 Umpqua Holdings ( UMPQ) 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 Umpqua Holdings as such a stock due to the following factors:

  • UMPQ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $56.7 million.
  • UMPQ has traded 463,059 shares today.
  • UMPQ is trading at 2.38 times the normal volume for the stock at this time of day.
  • UMPQ 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 UMPQ:

Umpqua Holdings Corporation operates as the holding company for Umpqua Bank and Umpqua Investments, Inc. that provide commercial and retail banking, and brokerage services to corporate, institutional, and individual customers in the United States. The stock currently has a dividend yield of 3.4%. UMPQ has a PE ratio of 23.2. Currently there are 4 analysts that rate Umpqua Holdings a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Umpqua Holdings has been 1.4 million shares per day over the past 30 days. Umpqua has a market cap of $3.8 billion and is part of the financial sector and banking industry. The stock has a beta of 1.08 and a short float of 7.6% with 2.29 days to cover. Shares are down 10.3% 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 Umpqua Holdings as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • UMPQ's very impressive revenue growth greatly exceeded the industry average of 9.0%. Since the same quarter one year prior, revenues leaped by 112.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 151.3% when compared to the same quarter one year prior, rising from $23.48 million to $58.99 million.
  • The gross profit margin for UMPQUA HOLDINGS CORP is currently very high, coming in at 90.67%. Regardless of UMPQ's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, UMPQ's net profit margin of 19.56% compares favorably to the industry average.
  • UMPQUA HOLDINGS CORP has improved earnings per share by 28.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, UMPQUA HOLDINGS CORP reported lower earnings of $0.87 versus $0.91 in the prior year. For the next year, the market is expecting a contraction of 2.3% in earnings ($0.85 versus $0.87).
  • In its most recent trading session, UMPQ has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the 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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