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 Watsco ( WSO) as a new lifetime high candidate. In addition to specific proprietary factors, Trade-Ideas identified Watsco as such a stock due to the following factors:

  • WSO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.8 million.
  • WSO has traded 511 shares today.
  • WSO is trading at a new lifetime high.

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More details on WSO:

Watsco, Inc., together with its subsidiaries, distributes air conditioning, heating, and refrigeration equipment; and related parts and supplies in the United States, Canada, Mexico, and Puerto Rico. The stock currently has a dividend yield of 2.2%. WSO has a PE ratio of 28.9. Currently there are 4 analysts that rate Watsco a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Watsco has been 203,600 shares per day over the past 30 days. Watsco has a market cap of $3.8 billion and is part of the services sector and wholesale industry. The stock has a beta of 0.76 and a short float of 3.7% with 5.99 days to cover. Shares are up 16.7% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Watsco as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • WATSCO INC has improved earnings per share by 38.0% 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, WATSCO INC increased its bottom line by earning $4.33 versus $3.69 in the prior year. This year, the market expects an improvement in earnings ($5.05 versus $4.33).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Trading Companies & Distributors industry. The net income increased by 39.0% when compared to the same quarter one year prior, rising from $17.32 million to $24.07 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.7%. Since the same quarter one year prior, revenues slightly increased by 6.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.34, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, WSO has a quick ratio of 1.60, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 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. Compared to other companies in the Trading Companies & Distributors industry and the overall market on the basis of return on equity, WATSCO INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

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