United Technologies (UTX) Is Today's 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 United Technologies ( UTX) 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 United Technologies as such a stock due to the following factors:

  • UTX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $404.6 million.
  • UTX has traded 4.5 million shares today.
  • UTX is trading at 1.71 times the normal volume for the stock at this time of day.
  • UTX 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 UTX:

United Technologies Corporation provides technology products and services to the building systems and aerospace industries worldwide. The stock currently has a dividend yield of 2.1%. UTX has a PE ratio of 16.3. Currently there are 12 analysts that rate United Technologies a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for United Technologies has been 4.1 million shares per day over the past 30 days. United has a market cap of $100.6 billion and is part of the industrial goods sector and aerospace/defense industry. The stock has a beta of 1.21 and a short float of 0.8% with 1.84 days to cover. Shares are down 4.4% year-to-date as of the close of trading on Monday.

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 United Technologies as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, increase in net income, 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 lackluster performance in the stock itself.

Highlights from the ratings report include:
  • UTX's revenue growth has slightly outpaced the industry average of 0.7%. Since the same quarter one year prior, revenues slightly increased by 4.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • UNITED TECHNOLOGIES CORP has improved earnings per share by 31.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, UNITED TECHNOLOGIES CORP increased its bottom line by earning $6.22 versus $5.35 in the prior year. This year, the market expects an improvement in earnings ($6.85 versus $6.22).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Aerospace & Defense industry average. The net income increased by 29.5% when compared to the same quarter one year prior, rising from $1,432.00 million to $1,854.00 million.
  • Net operating cash flow has increased to $1,948.00 million or 19.21% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -10.63%.
  • The current debt-to-equity ratio, 0.59, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that UTX's debt-to-equity ratio is low, the quick ratio, which is currently 0.67, displays a potential problem in covering short-term cash needs.

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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