Trade-Ideas: NCI Building Systems (NCS) Is Today's Strong And Under The Radar 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 NCI Building Systems ( NCS) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified NCI Building Systems as such a stock due to the following factors:

  • NCS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.8 million.
  • NCS is making at least a new 3-day high.
  • NCS has a PE ratio of 65.0.
  • NCS is mentioned 0.39 times per day on StockTwits.
  • NCS has not yet been mentioned on StockTwits today.
  • NCS is currently in the upper 20% of its 1-year range.
  • NCS is in the upper 35% of its 20-day range.
  • NCS is in the upper 45% of its 5-day range.
  • NCS 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 NCS:

NCI Building Systems, Inc. manufactures and markets metal products for the nonresidential construction industry in North America. NCS has a PE ratio of 65.0. Currently there are 3 analysts that rate NCI Building Systems a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for NCI Building Systems has been 248,900 shares per day over the past 30 days. NCI Building Systems has a market cap of $1.4 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.33 and a short float of 6.4% with 9.99 days to cover. Shares are up 3.4% 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 NCI Building Systems as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 2.1%. Since the same quarter one year prior, revenues rose by 14.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • NCI BUILDING SYSTEMS INC 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, NCI BUILDING SYSTEMS INC continued to lose money by earning -$0.55 versus -$4.06 in the prior year. This year, the market expects an improvement in earnings ($0.15 versus -$0.55).
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Building Products industry and the overall market, NCI BUILDING SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for NCI BUILDING SYSTEMS INC is rather low; currently it is at 24.49%. Regardless of NCS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.68% trails 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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