Today's Strong And Under The Radar Stock: Covanta (CVA)

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

  • CVA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $41.7 million.
  • CVA is making at least a new 3-day high.
  • CVA has a PE ratio of 127.3.
  • CVA is mentioned 1.81 times per day on StockTwits.
  • CVA has not yet been mentioned on StockTwits today.
  • CVA is currently in the upper 20% of its 1-year range.
  • CVA is in the upper 35% of its 20-day range.
  • CVA is in the upper 45% of its 5-day range.
  • CVA 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 CVA:

Covanta Holding Corporation, through its subsidiaries, provides waste and energy services to municipal entities primarily in North America. The stock currently has a dividend yield of 4.1%. CVA has a PE ratio of 127.3. Currently there are 8 analysts that rate Covanta a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Covanta has been 1.5 million shares per day over the past 30 days. Covanta has a market cap of $3.2 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 0.30 and a short float of 12.7% with 6.92 days to cover. Shares are up 35.2% 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 Covanta as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, expanding profit margins and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, CVA's share price has jumped by 31.84%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp 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 other strengths this company displays justify these higher price levels.
  • 35.51% is the gross profit margin for COVANTA HOLDING CORP which we consider to be strong. Regardless of CVA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.44% trails the industry average.
  • COVANTA HOLDING CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, COVANTA HOLDING CORP reported lower earnings of $0.35 versus $0.87 in the prior year. This year, the market expects an improvement in earnings ($0.45 versus $0.35).
  • CVA, with its decline in revenue, underperformed when compared the industry average of 8.3%. Since the same quarter one year prior, revenues slightly dropped by 2.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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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