Trade-Ideas LLC identified HDFC Bank ( HDB) 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 HDFC Bank as such a stock due to the following factors:

  • HDB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $54.2 million.
  • HDB has traded 590,655 shares today.
  • HDB is trading at 1.79 times the normal volume for the stock at this time of day.
  • HDB 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 HDB:

HDFC Bank Limited provides a range of banking and financial services to individuals and businesses in India, Bahrain, Hong Kong, and Dubai. The company operates in Treasury, Retail Banking, Wholesale Banking, and Other Banking Business segments. The stock currently has a dividend yield of 0.6%. HDB has a PE ratio of 36. Currently there are 2 analysts that rate HDFC Bank a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for HDFC Bank has been 679,500 shares per day over the past 30 days. HDFC has a market cap of $48.3 billion and is part of the financial sector and banking industry. Shares are down 6.3% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates HDFC Bank as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, growth in earnings per share, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 2.6%. Since the same quarter one year prior, revenues rose by 17.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Commercial Banks industry average. The net income increased by 14.0% when compared to the same quarter one year prior, going from $373.43 million to $425.72 million.
  • HDFC BANK LTD has improved earnings per share by 10.9% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, HDFC BANK LTD increased its bottom line by earning $2.10 versus $1.83 in the prior year. For the next year, the market is expecting a contraction of 30.3% in earnings ($1.46 versus $2.10).
  • The gross profit margin for HDFC BANK LTD is rather high; currently it is at 53.28%. Regardless of HDB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HDB's net profit margin of 16.56% is significantly lower than the industry average.
  • 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 Commercial Banks industry and the overall market, HDFC BANK LTD's return on equity exceeds that of both the industry average and the S&P 500.

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