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

  • HCP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $153.2 million.
  • HCP has traded 930,126 shares today.
  • HCP is trading at 2.89 times the normal volume for the stock at this time of day.
  • HCP 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 HCP:

HCP, Inc. is an independent hybrid real estate investment trust. The fund invests in real estate markets of the United States. The stock currently has a dividend yield of 5.4%. HCP has a PE ratio of 21.6. Currently there are 2 analysts that rate HCP a buy, 2 analysts rate it a sell, and 10 rate it a hold.

The average volume for HCP has been 3.7 million shares per day over the past 30 days. HCP has a market cap of $19.3 billion and is part of the financial sector and real estate industry. The stock has a beta of -0.08 and a short float of 2.5% with 2.75 days to cover. Shares are down 4.3% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates HCP as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • HCP's revenue growth has slightly outpaced the industry average of 10.1%. Since the same quarter one year prior, revenues rose by 11.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $365.60 million or 19.74% when compared to the same quarter last year. In addition, HCP INC has also modestly surpassed the industry average cash flow growth rate of 13.05%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The gross profit margin for HCP INC is rather high; currently it is at 56.56%. Regardless of HCP'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 32.03% trails the industry average.
  • HCP INC's earnings per share declined by 15.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, HCP INC reported lower earnings of $1.95 versus $1.97 in the prior year. This year, the market expects an improvement in earnings ($2.03 versus $1.95).

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