Don't Miss Today's Strong And Under The Radar Stock: Churchill Downs (CHDN)

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

  • CHDN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $6.0 million.
  • CHDN is making at least a new 3-day high.
  • CHDN has a PE ratio of 47.
  • CHDN is mentioned 1.42 times per day on StockTwits.
  • CHDN has not yet been mentioned on StockTwits today.
  • CHDN is currently in the upper 20% of its 1-year range.
  • CHDN is in the upper 35% of its 20-day range.
  • CHDN is in the upper 45% of its 5-day range.
  • CHDN 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 CHDN:

Churchill Downs Incorporated provides pari-mutuel horseracing, online account wagering on horseracing, and casino gaming services. It operates in five segments: Racing, Casinos, TwinSpires, Big Fish Games, Inc., and Other Investments. The stock currently has a dividend yield of 0.8%. CHDN has a PE ratio of 47. Currently there are 2 analysts that rate Churchill Downs a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Churchill Downs has been 68,400 shares per day over the past 30 days. Churchill Downs has a market cap of $2.2 billion and is part of the services sector and leisure industry. The stock has a beta of 0.58 and a short float of 5.5% with 15.78 days to cover. Shares are up 29.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:
  • CHDN's very impressive revenue growth greatly exceeded the industry average of 7.4%. Since the same quarter one year prior, revenues leaped by 50.1%. 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 significantly increased by 72.67% to $89.67 million when compared to the same quarter last year. In addition, CHURCHILL DOWNS INC has also vastly surpassed the industry average cash flow growth rate of -16.93%.
  • Compared to its closing price of one year ago, CHDN's share price has jumped by 41.94%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp 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 other strengths this company displays justify these higher price levels.
  • CHURCHILL DOWNS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, CHURCHILL DOWNS INC reported lower earnings of $2.56 versus $3.07 in the prior year. This year, the market expects an improvement in earnings ($4.10 versus $2.56).
  • The gross profit margin for CHURCHILL DOWNS INC is rather low; currently it is at 24.79%. Regardless of CHDN's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CHDN's net profit margin of -0.62% significantly underperformed when compared to the industry average.

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