Trade-Ideas: Harman International Industries (HAR) Is Today's

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 Harman International Industries ( HAR) 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 Harman International Industries as such a stock due to the following factors:

  • HAR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $62.2 million.
  • HAR has traded 587,883 shares today.
  • HAR is trading at 1.64 times the normal volume for the stock at this time of day.
  • HAR 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 HAR:

Harman International Industries, Incorporated develops, manufactures, and markets audio products, lighting solutions, and electronic systems, as well as digitally integrated audio and infotainment systems for the automotive industry worldwide. The stock currently has a dividend yield of 1.2%. HAR has a PE ratio of 21.5. Currently there are 6 analysts that rate Harman International Industries a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for Harman International Industries has been 778,700 shares per day over the past 30 days. Harman International has a market cap of $7.3 billion and is part of the consumer goods sector and consumer durables industry. The stock has a beta of 1.24 and a short float of 1.9% with 2.25 days to cover. Shares are up 25.2% 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 Harman International Industries as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 10.8%. Since the same quarter one year prior, revenues rose by 21.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • HARMAN INTERNATIONAL INDS reported significant earnings per share improvement 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 year. We feel that this trend should continue. During the past fiscal year, HARMAN INTERNATIONAL INDS increased its bottom line by earning $3.36 versus $2.05 in the prior year. This year, the market expects an improvement in earnings ($5.27 versus $3.36).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Household Durables industry. The net income increased by 78.6% when compared to the same quarter one year prior, rising from $46.45 million to $82.97 million.
  • Powered by its strong earnings growth of 78.78% and other important driving factors, this stock has surged by 32.19% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.
  • HAR's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.86 is somewhat weak and could be cause for future problems.

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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