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.

Trade-Ideas LLC identified Principal Financial Group ( PFG) 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 Principal Financial Group as such a stock due to the following factors:

  • PFG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $77.0 million.
  • PFG has traded 347,466 shares today.
  • PFG is trading at 2.86 times the normal volume for the stock at this time of day.
  • PFG 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 PFG:

Principal Financial Group, Inc. provides retirement, asset management, and insurance products and services. It operates through Retirement and Investor Services, Principal Global Investors, Principal International, and U.S. Insurance Solutions segments. The stock currently has a dividend yield of 2.8%. PFG has a PE ratio of 14.0. Currently there are 6 analysts that rate Principal Financial Group a buy, 2 analysts rate it a sell, and 5 rate it a hold.

The average volume for Principal Financial Group has been 1.3 million shares per day over the past 30 days. Principal Financial Group has a market cap of $15.0 billion and is part of the financial sector and insurance industry. The stock has a beta of 1.95 and a short float of 1.7% with 3.28 days to cover. Shares are down 2.5% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Principal Financial Group 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, increase in stock price during the past year, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.4%. Since the same quarter one year prior, revenues slightly increased by 8.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although PFG's debt-to-equity ratio of 0.25 is very low, it is currently higher than that of the industry average.
  • 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, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • PRINCIPAL FINANCIAL GRP INC has improved earnings per share by 16.7% 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, PRINCIPAL FINANCIAL GRP INC increased its bottom line by earning $3.66 versus $2.96 in the prior year. This year, the market expects an improvement in earnings ($4.37 versus $3.66).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Insurance industry average. The net income increased by 15.3% when compared to the same quarter one year prior, going from $241.70 million to $278.70 million.

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