Southern Copper (SCCO) 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 Southern Copper ( SCCO) 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 Southern Copper as such a stock due to the following factors:

  • SCCO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $57.5 million.
  • SCCO has traded 1.2 million shares today.
  • SCCO is trading at 1.69 times the normal volume for the stock at this time of day.
  • SCCO 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 SCCO:

Southern Copper Corporation is engaged in the mining, exploring, smelting, and refining copper and other minerals in Peru, Mexico, Argentina, Chile, and Ecuador. The stock currently has a dividend yield of 1.6%. SCCO has a PE ratio of 17.9. Currently there are 4 analysts that rate Southern Copper a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Southern Copper has been 1.9 million shares per day over the past 30 days. Southern Copper has a market cap of $24.3 billion and is part of the basic materials sector and metals & mining industry. The stock has a beta of 0.62 and a short float of 7.9% with 6.05 days to cover. Shares are up 4% 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 Southern Copper as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, feeble growth in the company's earnings per share and weak operating cash flow.

Highlights from the ratings report include:
  • SCCO's revenue growth has slightly outpaced the industry average of 3.5%. Since the same quarter one year prior, revenues slightly increased by 6.5%. 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.
  • SCCO's debt-to-equity ratio of 0.72 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that SCCO's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.53 is high and demonstrates strong liquidity.
  • SOUTHERN COPPER CORP' earnings per share from the most recent quarter came in slightly below the year earlier quarter. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, SOUTHERN COPPER CORP reported lower earnings of $1.92 versus $2.28 in the prior year. For the next year, the market is expecting a contraction of 16.7% in earnings ($1.60 versus $1.92).
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Metals & Mining industry average. The net income has decreased by 5.8% when compared to the same quarter one year ago, dropping from $344.22 million to $324.32 million.

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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