Trade-Ideas: VF (VFC) Is Today's

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 VF ( VFC) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified VF as such a stock due to the following factors:

  • VFC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $115.2 million.
  • VFC has traded 1.6 million shares today.
  • VFC is trading at 1.72 times the normal volume for the stock at this time of day.
  • VFC crossed above its 200-day simple moving average.

'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize on. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on VFC:

V.F. Corporation designs, manufactures, markets, and distributes branded lifestyle apparel, footwear, and accessories in the United States and Europe. The stock currently has a dividend yield of 1.8%. VFC has a PE ratio of 29. Currently there are 15 analysts that rate VF a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for VF has been 1.6 million shares per day over the past 30 days. VF has a market cap of $29.8 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.03 and a short float of 0.9% with 2.40 days to cover. Shares are down 6.4% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.3%. Since the same quarter one year prior, revenues slightly increased by 2.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • The gross profit margin for VF CORP is rather high; currently it is at 51.34%. Regardless of VFC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VFC's net profit margin of 10.17% compares favorably to the industry average.
  • VF CORP reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, VF CORP reported lower earnings of $2.39 versus $2.71 in the prior year. This year, the market expects an improvement in earnings ($3.20 versus $2.39).
  • Despite currently having a low debt-to-equity ratio of 0.51, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.85 is weak.

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