Strong And Under The Radar Today: Sensient Technologies (SXT)

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

  • SXT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $13.6 million.
  • SXT is making at least a new 3-day high.
  • SXT has a PE ratio of 39.
  • SXT is mentioned 1.03 times per day on StockTwits.
  • SXT has not yet been mentioned on StockTwits today.
  • SXT is currently in the upper 20% of its 1-year range.
  • SXT is in the upper 35% of its 20-day range.
  • SXT is in the upper 45% of its 5-day range.
  • SXT 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 SXT:

Sensient Technologies Corporation manufactures and markets colors, flavors, and fragrances in the United States and internationally. The company operates through two segments, Flavors & Fragrances Group, and Color Group. The stock currently has a dividend yield of 1.5%. SXT has a PE ratio of 39. Currently there are 3 analysts that rate Sensient Technologies a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Sensient Technologies has been 236,300 shares per day over the past 30 days. Sensient has a market cap of $3.2 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 0.96 and a short float of 3.1% with 6.32 days to cover. Shares are up 11.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sensient Technologies as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, solid stock price performance and impressive record of earnings per share growth. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

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 Chemicals industry. The net income increased by 1571.1% when compared to the same quarter one year prior, rising from -$2.08 million to $30.53 million.
  • The current debt-to-equity ratio, 0.53, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.26, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has significantly increased by 54.21% to $30.59 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 15.79%.
  • Powered by its strong earnings growth of 1200.00% and other important driving factors, this stock has surged by 26.82% 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.
  • SENSIENT TECHNOLOGIES CORP 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, SENSIENT TECHNOLOGIES CORP reported lower earnings of $1.68 versus $2.30 in the prior year. This year, the market expects an improvement in earnings ($3.06 versus $1.68).

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