Today's Momo Momentum Stock To Watch: Martin Marietta Materials (MLM)

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 Martin Marietta Materials ( MLM) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Martin Marietta Materials as such a stock due to the following factors:

  • MLM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $150.2 million.
  • MLM has a PE ratio of 45.9.
  • MLM is currently in the upper 30% of its 1-year range.
  • MLM is in the upper 25% of its 20-day range.
  • MLM is in the upper 35% of its 5-day range.
  • MLM is currently trading above yesterday's high.
  • MLM has experienced a gap between today's open and yesterday's close of 1.6%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on MLM:

Martin Marietta Materials, Inc., together with its subsidiaries, supplies aggregates products and heavy building materials for the construction industry in the United States and internationally. The stock currently has a dividend yield of 1.1%. MLM has a PE ratio of 45.9. Currently there are 3 analysts that rate Martin Marietta Materials a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Martin Marietta Materials has been 823,900 shares per day over the past 30 days. Martin Marietta has a market cap of $10.1 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.78 and a short float of 6.6% with 4.43 days to cover. Shares are up 35.1% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Martin Marietta Materials as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, solid stock price performance, growth in earnings per share and compelling growth in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • MLM's very impressive revenue growth greatly exceeded the industry average of 19.7%. Since the same quarter one year prior, revenues leaped by 61.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has significantly increased by 430.85% to $35.10 million when compared to the same quarter last year. In addition, MARTIN MARIETTA MATERIALS has also vastly surpassed the industry average cash flow growth rate of 40.06%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • MARTIN MARIETTA MATERIALS reported significant earnings per share improvement 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, MARTIN MARIETTA MATERIALS reported lower earnings of $2.53 versus $2.61 in the prior year. This year, the market expects an improvement in earnings ($5.22 versus $2.53).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Construction Materials industry average, but is greater than that of the S&P 500. The net income increased by 128.2% when compared to the same quarter one year prior, rising from -$21.62 million to $6.10 million.

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