Storm The Castle Stock Of The Day: Tractor Supply (TSCO)

Trade-Ideas LLC identified Tractor Supply ( TSCO) 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 Tractor Supply as such a stock due to the following factors:

  • TSCO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $82.9 million.
  • TSCO has traded 916,424 shares today.
  • TSCO is trading at 1.67 times the normal volume for the stock at this time of day.
  • TSCO 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 TSCO:

Tractor Supply Company operates rural lifestyle retail stores in the United States. The stock currently has a dividend yield of 0.9%. TSCO has a PE ratio of 3. Currently there are 15 analysts that rate Tractor Supply a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Tractor Supply has been 783,500 shares per day over the past 30 days. Tractor Supply has a market cap of $11.6 billion and is part of the services sector and specialty retail industry. The stock has a beta of 1.44 and a short float of 4% with 4.88 days to cover. Shares are up 6% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Tractor Supply as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, increase in net income, expanding profit margins 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:
  • TSCO's revenue growth has slightly outpaced the industry average of 10.5%. Since the same quarter one year prior, revenues rose by 11.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • TRACTOR SUPPLY CO has improved earnings per share by 17.9% 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, TRACTOR SUPPLY CO increased its bottom line by earning $2.66 versus $2.33 in the prior year. This year, the market expects an improvement in earnings ($3.08 versus $2.66).
  • 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 Specialty Retail industry average. The net income increased by 14.9% when compared to the same quarter one year prior, going from $133.41 million to $153.33 million.
  • 35.27% is the gross profit margin for TRACTOR SUPPLY CO which we consider to be strong. 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 8.64% is in-line with the industry average.
  • 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 41.73% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

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