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 ESCO Technologies ( ESE) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified ESCO Technologies as such a stock due to the following factors:

  • ESE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.1 million.
  • ESE is making at least a new 3-day high.
  • ESE has a PE ratio of 23.4.
  • ESE is mentioned 1.16 times per day on StockTwits.
  • ESE has not yet been mentioned on StockTwits today.
  • ESE is currently in the upper 20% of its 1-year range.
  • ESE is in the upper 35% of its 20-day range.
  • ESE is in the upper 45% of its 5-day range.
  • ESE 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 ESE:

ESCO Technologies Inc., together with its subsidiaries, produces and supplies engineered products and systems for utility, industrial, aerospace, and commercial markets worldwide. It operates through three segments: Filtration/Fluid Flow, RF Shielding and Test, and Utility Solutions Group. The stock currently has a dividend yield of 0.8%. ESE has a PE ratio of 23.4. Currently there are no analysts that rate ESCO Technologies a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for ESCO Technologies has been 102,300 shares per day over the past 30 days. ESCO has a market cap of $1.0 billion and is part of the technology sector and electronics industry. The stock has a beta of 0.98 and a short float of 2% with 3.08 days to cover. Shares are up 5.8% 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 ESCO Technologies as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • ESCO TECHNOLOGIES INC has improved earnings per share by 24.2% 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, ESCO TECHNOLOGIES INC increased its bottom line by earning $1.60 versus $1.17 in the prior year. This year, the market expects an improvement in earnings ($1.77 versus $1.60).
  • ESE's debt-to-equity ratio is very low at 0.10 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 1.11, which illustrates the ability to avoid short-term cash problems.
  • 43.58% is the gross profit margin for ESCO TECHNOLOGIES INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 8.98% is above that of the industry average.
  • Net operating cash flow has significantly increased by 94.04% to -$0.40 million when compared to the same quarter last year. In addition, ESCO TECHNOLOGIES INC has also vastly surpassed the industry average cash flow growth rate of -12.41%.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

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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