Strong And Under The Radar: Regal Beloit (RBC)

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 Regal Beloit ( RBC) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Regal Beloit as such a stock due to the following factors:

  • RBC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $35.4 million.
  • RBC is making at least a new 3-day high.
  • RBC has a PE ratio of 91.
  • RBC is mentioned 1.45 times per day on StockTwits.
  • RBC has not yet been mentioned on StockTwits today.
  • RBC is currently in the upper 20% of its 1-year range.
  • RBC is in the upper 35% of its 20-day range.
  • RBC is in the upper 45% of its 5-day range.
  • RBC 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 RBC:

Regal Beloit Corporation, together with its subsidiaries, designs, manufactures, and sells electric motors and controls, electric generators and controls, and power transmission products in the United States and internationally. The stock currently has a dividend yield of 1.2%. RBC has a PE ratio of 91. Currently there are 6 analysts that rate Regal Beloit a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Regal Beloit has been 334,900 shares per day over the past 30 days. Regal Beloit has a market cap of $3.5 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.30 and a short float of 2.5% with 2.76 days to cover. Shares are up 4.4% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Regal Beloit as a buy. Among the primary strengths of the company is its revenue growth. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 12.5%. Since the same quarter one year prior, revenues rose by 13.8%. 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.
  • REGAL BELOIT CORP's earnings per share declined by 15.6% 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 two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, REGAL BELOIT CORP reported lower earnings of $0.64 versus $2.64 in the prior year. This year, the market expects an improvement in earnings ($5.49 versus $0.64).
  • The gross profit margin for REGAL BELOIT CORP is currently lower than what is desirable, coming in at 30.66%. Regardless of RBC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.99% trails the industry average.
  • In its most recent trading session, RBC has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • The debt-to-equity ratio of 1.00 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, RBC's quick ratio is somewhat strong at 1.13, demonstrating the ability to handle short-term liquidity needs.

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