Eyes On Eastman Chemical (EMN): Highlighted 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 Eastman Chemical ( EMN) 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 Eastman Chemical as such a stock due to the following factors:

  • EMN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $185.5 million.
  • EMN has traded 1.8 million shares today.
  • EMN is trading at 1.63 times the normal volume for the stock at this time of day.
  • EMN 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 EMN:

Eastman Chemical Company, a specialty chemical company, manufactures and sells chemicals, plastics, and fibers in the United States and internationally. The stock currently has a dividend yield of 1.7%. EMN has a PE ratio of 11.7. Currently there are 11 analysts that rate Eastman Chemical a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Eastman Chemical has been 1.4 million shares per day over the past 30 days. Eastman Chemical has a market cap of $12.2 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 1.71 and a short float of 1.2% with 0.82 days to cover. Shares are up 2.2% year-to-date as of the close of trading on Friday.

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 Eastman Chemical as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, good cash flow from operations, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.9%. Since the same quarter one year prior, revenues slightly increased by 3.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $560.00 million or 31.14% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 12.19%.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to other companies in the Chemicals industry and the overall market on the basis of return on equity, EASTMAN CHEMICAL CO has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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.

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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