W W Grainger (GWW) Highlighted As 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 W W Grainger ( GWW) 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 W W Grainger as such a stock due to the following factors:

  • GWW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $125.7 million.
  • GWW has traded 61,533 shares today.
  • GWW is trading at 1.83 times the normal volume for the stock at this time of day.
  • GWW 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 GWW:

W.W. Grainger, Inc. operates as a distributor of maintenance, repair, and operating (MRO) supplies; and other related products and services that are used by businesses and institutions in the United States and Canada. The stock currently has a dividend yield of 1.7%. GWW has a PE ratio of 21.7. Currently there are 7 analysts that rate W W Grainger a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for W W Grainger has been 503,400 shares per day over the past 30 days. W W Grainger has a market cap of $17.0 billion and is part of the services sector and wholesale industry. The stock has a beta of 1.18 and a short float of 6.5% with 7.57 days to cover. Shares are down 5% 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 W W Grainger as a buy. 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, growth in earnings per share, increase in net income and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • GWW's revenue growth has slightly outpaced the industry average of 6.3%. Since the same quarter one year prior, revenues slightly increased by 6.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • GWW's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.34, which illustrates the ability to avoid short-term cash problems.
  • GRAINGER (W W) INC has improved earnings per share by 11.9% 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, GRAINGER (W W) INC increased its bottom line by earning $11.12 versus $9.52 in the prior year. This year, the market expects an improvement in earnings ($12.28 versus $11.12).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Trading Companies & Distributors industry average. The net income increased by 9.3% when compared to the same quarter one year prior, going from $210.79 million to $230.32 million.
  • 45.15% is the gross profit margin for GRAINGER (W W) INC which we consider to be strong. Regardless of GWW'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 8.98% 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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