Eyes On Dick's Sporting Goods (DKS): 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 Dick's Sporting Goods ( DKS) 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 Dick's Sporting Goods as such a stock due to the following factors:

  • DKS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $70.9 million.
  • DKS has traded 1.6 million shares today.
  • DKS is trading at 2.50 times the normal volume for the stock at this time of day.
  • DKS 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 DKS:

Dick's Sporting Goods, Inc. operates as a sports and fitness retailer primarily in the eastern United States. The company provides hardlines, including sporting goods equipment, fitness equipment, golf equipment, and hunting and fishing gear products; apparel; and footwear products. The stock currently has a dividend yield of 1.1%. DKS has a PE ratio of 17.5. Currently there are 8 analysts that rate Dick's Sporting Goods a buy, no analysts rate it a sell, and 13 rate it a hold.

The average volume for Dick's Sporting Goods has been 1.5 million shares per day over the past 30 days. Dick's Sporting Goods has a market cap of $4.5 billion and is part of the services sector and specialty retail industry. The stock has a beta of 1.48 and a short float of 4.8% with 3.16 days to cover. Shares are down 20.9% 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 Dick's Sporting Goods as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • DKS's revenue growth has slightly outpaced the industry average of 1.5%. Since the same quarter one year prior, revenues rose by 10.3%. 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 significantly increased by 71.24% to $138.30 million when compared to the same quarter last year. In addition, DICKS SPORTING GOODS INC has also vastly surpassed the industry average cash flow growth rate of 20.78%.
  • DKS's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.18 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • DICKS SPORTING GOODS INC's earnings per share declined by 14.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DICKS SPORTING GOODS INC increased its bottom line by earning $2.70 versus $2.31 in the prior year. This year, the market expects an improvement in earnings ($2.79 versus $2.70).

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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