Trade-Ideas LLC identified CIT Group ( CIT) 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 CIT Group as such a stock due to the following factors:

  • CIT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $80.5 million.
  • CIT has traded 3.1 million shares today.
  • CIT is trading at 10.44 times the normal volume for the stock at this time of day.
  • CIT 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 CIT:

CIT Group Inc. operates as the holding company for CIT bank that provides commercial financing and leasing products; and a suite of savings options in the United States. The stock currently has a dividend yield of 1.5%. CIT has a PE ratio of 8. Currently there are 8 analysts that rate CIT Group a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for CIT Group has been 1.7 million shares per day over the past 30 days. CIT Group has a market cap of $6.9 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.29 and a short float of 4.8% with 4.70 days to cover. Shares are down 16.6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates CIT Group as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, CIT GROUP INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • The gross profit margin for CIT GROUP INC is rather high; currently it is at 66.29%. Regardless of CIT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 12.88% trails the industry average.
  • CIT, with its decline in revenue, slightly underperformed the industry average of 3.6%. Since the same quarter one year prior, revenues slightly dropped by 3.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • CIT GROUP INC's earnings per share declined by 35.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CIT GROUP INC increased its bottom line by earning $5.73 versus $3.19 in the prior year. For the next year, the market is expecting a contraction of 50.1% in earnings ($2.86 versus $5.73).
  • The share price of CIT GROUP INC has not done very well: it is down 6.80% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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