Today's Strong And Under The Radar Stock: Heico (HEI)

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

  • HEI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $14.9 million.
  • HEI is making at least a new 3-day high.
  • HEI has a PE ratio of 33.
  • HEI is mentioned 0.90 times per day on StockTwits.
  • HEI has not yet been mentioned on StockTwits today.
  • HEI is currently in the upper 20% of its 1-year range.
  • HEI is in the upper 35% of its 20-day range.
  • HEI is in the upper 45% of its 5-day range.
  • HEI 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 HEI:

HEICO Corporation, through its subsidiaries, designs, manufactures, and sells aerospace, defense, and electronic related products and services in the United States and internationally. The stock currently has a dividend yield of 0.2%. HEI has a PE ratio of 33. Currently there are 5 analysts that rate Heico a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for Heico has been 189,900 shares per day over the past 30 days. Heico has a market cap of $1.6 billion and is part of the industrial goods sector and aerospace/defense industry. The stock has a beta of 0.70 and a short float of 15.5% with 11.91 days to cover. Shares are up 1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Heico as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • HEICO CORP has improved earnings per share by 16.7% 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 two years. We feel that this trend should continue. During the past fiscal year, HEICO CORP increased its bottom line by earning $1.80 versus $1.52 in the prior year. This year, the market expects an improvement in earnings ($3.94 versus $1.80).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Aerospace & Defense industry average. The net income increased by 16.7% when compared to the same quarter one year prior, going from $28.37 million to $33.11 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 3.4%. Since the same quarter one year prior, revenues slightly increased by 3.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The current debt-to-equity ratio, 0.44, 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 1.23, which illustrates the ability to avoid short-term cash problems.
  • 40.40% is the gross profit margin for HEICO CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 11.35% is above that of the industry average.

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