Trade-Ideas LLC identified First Republic Bank ( FRC) 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 First Republic Bank as such a stock due to the following factors:

  • FRC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $75.1 million.
  • FRC has traded 476,960 shares today.
  • FRC is trading at 2.50 times the normal volume for the stock at this time of day.
  • FRC 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 FRC:

First Republic Bank, together with its subsidiaries, provides private banking, private business banking, real estate lending, and wealth management services to clients in metropolitan areas of the United States. It operates through two segments, Commercial Banking and Wealth Management. The stock currently has a dividend yield of 1%. FRC has a PE ratio of 2. Currently there are 8 analysts that rate First Republic Bank a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for First Republic Bank has been 1.1 million shares per day over the past 30 days. First Republic has a market cap of $8.5 billion and is part of the financial sector and banking industry. Shares are down 5.7% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 0.2%. Since the same quarter one year prior, revenues rose by 16.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • FIRST REPUBLIC BANK 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, FIRST REPUBLIC BANK increased its bottom line by earning $3.17 versus $3.07 in the prior year. This year, the market expects an improvement in earnings ($3.65 versus $3.17).
  • 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 Commercial Banks industry average. The net income increased by 21.3% when compared to the same quarter one year prior, going from $115.46 million to $140.05 million.
  • The gross profit margin for FIRST REPUBLIC BANK is currently very high, coming in at 90.86%. 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 26.35% trails the industry average.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

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