Today's Strong And Under The Radar Stock: West Pharmaceutical Services (WST)

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 West Pharmaceutical Services ( WST) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified West Pharmaceutical Services as such a stock due to the following factors:

  • WST has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $10.5 million.
  • WST is making at least a new 3-day high.
  • WST has a PE ratio of 31.
  • WST is mentioned 1.32 times per day on StockTwits.
  • WST has not yet been mentioned on StockTwits today.
  • WST is currently in the upper 20% of its 1-year range.
  • WST is in the upper 35% of its 20-day range.
  • WST is in the upper 45% of its 5-day range.
  • WST 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 WST:

West Pharmaceutical Services, Inc. develops, manufactures, and sells components and systems for the packaging and delivery of injectable drugs, as well as delivery system components for the pharmaceutical, healthcare, and consumer products industries. The stock currently has a dividend yield of 0.8%. WST has a PE ratio of 31. Currently there are no analysts that rate West Pharmaceutical Services a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for West Pharmaceutical Services has been 270,000 shares per day over the past 30 days. West Pharmaceutical Services has a market cap of $4.1 billion and is part of the health care sector and health services industry. The stock has a beta of 1.16 and a short float of 2.9% with 11.23 days to cover. Shares are up 6.9% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates West Pharmaceutical Services as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 32.04% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • WEST PHARMACEUTICAL SVSC INC has improved earnings per share by 18.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, WEST PHARMACEUTICAL SVSC INC increased its bottom line by earning $1.76 versus $1.58 in the prior year. This year, the market expects an improvement in earnings ($1.80 versus $1.76).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Health Care Equipment & Supplies industry average. The net income increased by 21.4% when compared to the same quarter one year prior, going from $27.10 million to $32.90 million.
  • The current debt-to-equity ratio, 0.35, 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 1.34, which illustrates the ability to avoid short-term cash problems.

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