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

  • STNG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.6 million.
  • STNG is making at least a new 3-day high.
  • STNG has a PE ratio of 37.
  • STNG is mentioned 1.68 times per day on StockTwits.
  • STNG has not yet been mentioned on StockTwits today.
  • STNG is currently in the upper 20% of its 1-year range.
  • STNG is in the upper 35% of its 20-day range.
  • STNG is in the upper 45% of its 5-day range.
  • STNG 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 STNG:

Scorpio Tankers Inc., together with its subsidiaries, engages in the seaborne transportation of refined petroleum products and crude oil worldwide. The stock currently has a dividend yield of 5%. STNG has a PE ratio of 37. Currently there are 6 analysts that rate Scorpio Tankers a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Scorpio Tankers has been 2.2 million shares per day over the past 30 days. Scorpio Tankers has a market cap of $1.6 billion and is part of the services sector and transportation industry. The stock has a beta of 2.27 and a short float of 7.6% with 5.78 days to cover. Shares are up 16.9% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Scorpio Tankers as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and deteriorating net income.

Highlights from the ratings report include:
  • STNG's very impressive revenue growth greatly exceeded the industry average of 38.7%. Since the same quarter one year prior, revenues leaped by 109.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for SCORPIO TANKERS INC is rather high; currently it is at 57.50%. It has increased significantly from the same period last year. Along with this, the net profit margin of 25.32% significantly outperformed against the industry average.
  • SCORPIO TANKERS INC's earnings per share declined by 10.7% 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, SCORPIO TANKERS INC increased its bottom line by earning $0.27 versus $0.14 in the prior year. This year, the market expects an improvement in earnings ($0.94 versus $0.27).
  • The debt-to-equity ratio of 1.48 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, STNG maintains a poor quick ratio of 0.87, which illustrates the inability to avoid short-term cash problems.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SCORPIO TANKERS INC's return on equity significantly trails that of both the industry average and the S&P 500.

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