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

  • TFSL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.6 million.
  • TFSL is making at least a new 3-day high.
  • TFSL has a PE ratio of 69.
  • TFSL is mentioned 1.06 times per day on StockTwits.
  • TFSL has not yet been mentioned on StockTwits today.
  • TFSL is currently in the upper 20% of its 1-year range.
  • TFSL is in the upper 35% of its 20-day range.
  • TFSL is in the upper 45% of its 5-day range.
  • TFSL 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 TFSL:

TFS Financial Corporation operates as a holding company for Third Federal Savings and Loan Association of Cleveland that provides residential real estate mortgage loans and retail savings deposits. The stock currently has a dividend yield of 1.8%. TFSL has a PE ratio of 69. Currently there are 2 analysts that rate TFS Financial a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for TFS Financial has been 211,100 shares per day over the past 30 days. TFS Financial has a market cap of $4.5 billion and is part of the financial sector and banking industry. The stock has a beta of 0.88 and a short float of 3.1% with 10.93 days to cover. Shares are up 2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates TFS Financial as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, solid stock price performance and notable return on equity. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 9.2%. Since the same quarter one year prior, revenues slightly increased by 2.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • TFS FINANCIAL CORP reported flat earnings per share in the most recent quarter. 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, TFS FINANCIAL CORP increased its bottom line by earning $0.21 versus $0.18 in the prior year. This year, the market expects an improvement in earnings ($0.22 versus $0.21).
  • The gross profit margin for TFS FINANCIAL CORP is currently very high, coming in at 71.22%. 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 15.42% trails the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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 change in net income from the same quarter one year ago has exceeded that of the S&P 500 and the Thrifts & Mortgage Finance industry average. The net income has decreased by 4.4% when compared to the same quarter one year ago, dropping from $16.39 million to $15.67 million.

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