Today's Strong And Under The Radar Stock: Watts Water Technologies (WTS)

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 Watts Water Technologies ( WTS) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Watts Water Technologies as such a stock due to the following factors:

  • WTS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $16.9 million.
  • WTS is making at least a new 3-day high.
  • WTS has a PE ratio of 31.9.
  • WTS is mentioned 0.97 times per day on StockTwits.
  • WTS has not yet been mentioned on StockTwits today.
  • WTS is currently in the upper 20% of its 1-year range.
  • WTS is in the upper 35% of its 20-day range.
  • WTS is in the upper 45% of its 5-day range.
  • WTS is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

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More details on WTS:

Watts Water Technologies, Inc. designs, manufactures, and sells various water safety and flow control products for the water quality, water conservation, water safety, and water flow control markets in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The stock currently has a dividend yield of 1%. WTS has a PE ratio of 31.9. Currently there are 4 analysts that rate Watts Water Technologies a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Watts Water Technologies has been 227,400 shares per day over the past 30 days. Watts Water has a market cap of $1.7 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.62 and a short float of 5.3% with 5.69 days to cover. Shares are down 1.2% year-to-date as of the close of trading on Wednesday.

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 Watts Water Technologies as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations 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:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 46.8% when compared to the same quarter one year prior, rising from $15.40 million to $22.60 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 1.7%. Since the same quarter one year prior, revenues slightly increased by 1.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, WTS has a quick ratio of 1.65, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has increased to $55.10 million or 20.30% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -22.57%.
  • 39.87% is the gross profit margin for WATTS WATER TECHNOLOGIES INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.01% trails the industry average.

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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