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

  • WSO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $21.7 million.
  • WSO has traded 21.014900000000000801492205937393009662628173828125 options contracts today.
  • WSO is making at least a new 3-day high.
  • WSO has a PE ratio of 26.
  • WSO is mentioned 0.94 times per day on StockTwits.
  • WSO has not yet been mentioned on StockTwits today.
  • WSO is currently in the upper 20% of its 1-year range.
  • WSO is in the upper 35% of its 20-day range.
  • WSO is in the upper 45% of its 5-day range.
  • WSO 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 WSO:

Watsco, Inc., together with its subsidiaries, distributes air conditioning, heating, and refrigeration equipment; and related parts and supplies in the United States, Canada, Mexico, and Puerto Rico. The stock currently has a dividend yield of 2.7%. WSO has a PE ratio of 26. Currently there are 5 analysts that rate Watsco a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Watsco has been 236,000 shares per day over the past 30 days. Watsco has a market cap of $4.5 billion and is part of the services sector and wholesale industry. The stock has a beta of 0.91 and a short float of 3.8% with 5.51 days to cover. Shares are up 9.7% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Watsco as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, increase in net income and good cash flow from operations. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • WSO's revenue growth has slightly outpaced the industry average of 4.6%. Since the same quarter one year prior, revenues slightly increased by 3.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • WSO's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, WSO has a quick ratio of 1.80, which demonstrates the ability of the company to cover short-term liquidity needs.
  • WATSCO INC has improved earnings per share by 8.7% 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, WATSCO INC increased its bottom line by earning $4.89 versus $4.33 in the prior year. This year, the market expects an improvement in earnings ($5.52 versus $4.89).
  • 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 Trading Companies & Distributors industry average. The net income increased by 10.0% when compared to the same quarter one year prior, going from $24.07 million to $26.49 million.
  • Net operating cash flow has increased to $121.63 million or 17.78% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -0.42%.

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