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

  • LUX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $6.4 million.
  • LUX is making at least a new 3-day high.
  • LUX has a PE ratio of 59.
  • LUX is mentioned 1.32 times per day on StockTwits.
  • LUX has not yet been mentioned on StockTwits today.
  • LUX is currently in the upper 20% of its 1-year range.
  • LUX is in the upper 35% of its 20-day range.
  • LUX is in the upper 45% of its 5-day range.
  • LUX 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 LUX:

Luxottica Group S.p.A., together with its subsidiaries, provides fashion, luxury, sports, and performance eyewear worldwide. It operates through two segments, Manufacturing and Wholesale Distribution, and Retail Distribution. The stock currently has a dividend yield of 1.2%. LUX has a PE ratio of 59. Currently there is 1 analyst that rates Luxottica Group SpA a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Luxottica Group SpA has been 56,600 shares per day over the past 30 days. Luxottica Group SpA has a market cap of $32.3 billion and is part of the services sector and retail industry. Shares are up 23.7% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Luxottica Group SpA as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, expanding profit margins, solid stock price performance, increase in net income and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • LUXOTTICA GROUP SPA's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, LUXOTTICA GROUP SPA increased its bottom line by earning $1.61 versus $1.58 in the prior year. This year, the market expects an improvement in earnings ($2.10 versus $1.61).
  • The gross profit margin for LUXOTTICA GROUP SPA is rather high; currently it is at 66.12%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.52% trails the industry average.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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 net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Textiles, Apparel & Luxury Goods industry average. The net income increased by 4.3% when compared to the same quarter one year prior, going from $216.75 million to $225.98 million.
  • LUX, with its decline in revenue, underperformed when compared the industry average of 9.4%. Since the same quarter one year prior, revenues slightly dropped by 6.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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