Strong And Under The Radar Today: Covenant Transportation Group (CVTI)

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 Covenant Transportation Group ( CVTI) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Covenant Transportation Group as such a stock due to the following factors:

  • CVTI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.4 million.
  • CVTI is making at least a new 3-day high.
  • CVTI has a PE ratio of 45.0.
  • CVTI is mentioned 1.29 times per day on StockTwits.
  • CVTI has not yet been mentioned on StockTwits today.
  • CVTI is currently in the upper 20% of its 1-year range.
  • CVTI is in the upper 35% of its 20-day range.
  • CVTI is in the upper 45% of its 5-day range.
  • CVTI 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 CVTI:

Covenant Transportation Group, Inc., together with its subsidiaries, offers truckload transportation and brokerage services in the continental United States. Its Asset-Based Truckload Services segment provides long haul, dedicated, temperature-controlled, and regional solo-driver services. CVTI has a PE ratio of 45.0. Currently there are 2 analysts that rate Covenant Transportation Group a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Covenant Transportation Group has been 172,400 shares per day over the past 30 days. Covenant Transportation Group has a market cap of $284.3 million and is part of the services sector and transportation industry. The stock has a beta of 0.30 and a short float of 2.7% with 1.06 days to cover. Shares are up 185.3% 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 Covenant Transportation Group as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and notable return on equity. 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 10.5%. Since the same quarter one year prior, revenues slightly increased by 3.9%. 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.
  • Compared to its closing price of one year ago, CVTI's share price has jumped by 233.88%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • COVENANT TRANSPORTATION GRP's earnings per share declined by 7.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, COVENANT TRANSPORTATION GRP reported lower earnings of $0.35 versus $0.42 in the prior year. This year, the market expects an improvement in earnings ($0.98 versus $0.35).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Road & Rail industry and the overall market, COVENANT TRANSPORTATION GRP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The gross profit margin for COVENANT TRANSPORTATION GRP is currently extremely low, coming in at 13.05%. Regardless of CVTI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CVTI's net profit margin of 1.04% is significantly lower than 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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