Trade-Ideas: Dresser-Rand Group (DRC) Is Today's Strong And Under The Radar Stock

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 Dresser-Rand Group ( DRC) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Dresser-Rand Group as such a stock due to the following factors:

  • DRC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $48.0 million.
  • DRC is making at least a new 3-day high.
  • DRC has a PE ratio of 52.1.
  • DRC is mentioned 0.71 times per day on StockTwits.
  • DRC has not yet been mentioned on StockTwits today.
  • DRC is currently in the upper 20% of its 1-year range.
  • DRC is in the upper 35% of its 20-day range.
  • DRC is in the upper 45% of its 5-day range.
  • DRC 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 DRC:

Dresser-Rand Group Inc., together with its subsidiaries, designs, manufactures, sells, and services rotating equipment solutions to the oil, gas, chemical, petrochemical, process, power generation, military, and other industries worldwide. DRC has a PE ratio of 52.1. Currently there are no analysts that rate Dresser-Rand Group a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Dresser-Rand Group has been 882,400 shares per day over the past 30 days. Dresser-Rand Group has a market cap of $6.4 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 0.64 and a short float of 10.1% with 8.47 days to cover. Shares are up 1.3% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Dresser-Rand Group as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, solid stock price performance, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 40.9% when compared to the same quarter one year prior, rising from $32.80 million to $46.20 million.
  • Powered by its strong earnings growth of 39.53% and other important driving factors, this stock has surged by 36.78% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • DRESSER-RAND GROUP INC has improved earnings per share by 39.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DRESSER-RAND GROUP INC reported lower earnings of $1.60 versus $2.19 in the prior year. This year, the market expects an improvement in earnings ($2.45 versus $1.60).
  • DRC, with its decline in revenue, slightly underperformed the industry average of 2.3%. Since the same quarter one year prior, revenues slightly dropped by 5.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • DRC's debt-to-equity ratio of 0.83 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.95 is weak.

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