Storm The Castle Stock Of The Day: Praxair (PX)

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 Praxair ( PX) 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 Praxair as such a stock due to the following factors:

  • PX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $146.6 million.
  • PX has traded 1.1 million shares today.
  • PX is trading at 1.67 times the normal volume for the stock at this time of day.
  • PX 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 PX:

Praxair, Inc. produces, sells, and distributes atmospheric, process, and specialty gases, as well as surface coatings in North America, Europe, South America, and Asia. The stock currently has a dividend yield of 2.1%. PX has a PE ratio of 19.7. Currently there are 9 analysts that rate Praxair a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Praxair has been 1.4 million shares per day over the past 30 days. Praxair has a market cap of $36.1 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 0.71 and a short float of 2.2% with 5.78 days to cover. Shares are down 5.2% year-to-date as of the close of trading on Tuesday.

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 Praxair as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, notable return on equity, increase in net income and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • PRAXAIR INC has improved earnings per share by 8.7% 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, PRAXAIR INC increased its bottom line by earning $5.87 versus $5.61 in the prior year. This year, the market expects an improvement in earnings ($6.27 versus $5.87).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.4%. Since the same quarter one year prior, revenues slightly increased by 4.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Chemicals industry and the overall market, PRAXAIR INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • 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 Chemicals industry average. The net income increased by 7.2% when compared to the same quarter one year prior, going from $445.00 million to $477.00 million.
  • 43.38% is the gross profit margin for PRAXAIR INC which we consider to be strong. Regardless of PX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PX's net profit margin of 15.17% compares favorably to 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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