The stock closed in red for the week, but on a lower volume. It was up 4.08% on a 157% higher volume than the 10-week average. You want to see a strong close on heavy volume before initiating a position. That signals institutional buying. But do not conclude anything just based on this week’s action. A prudent approach would be to watch the price volume momentum in the coming trading sessions.
The key trend lines, 10 and 40-week moving averages are at a comfortable position. The current trends of both the averages are upward and the 10-week moving average is trending above the 40-week moving average. The current price of the stock is trading around 6.8% away from the 10-week moving average.
In the last twelve months, Timken India has rallied nearly 52.7% as compared to 53.4% for the Nifty500. It has a Relative Strength Rating of 55. We definitely would like to see improvement in the rating. At this point we are taking a step back and focusing on the RS Line.
The RS Line remains in a downtrend for the last four weeks. However, this is not unusual for a leading stock as the stock sets up base for its next leg up or at the very beginning of a new trend. At this point, the overall long term trend of the line is upward. If Timken India can maintain a healthy upward move, it could make sense as a CANSLIM trade.
Another key part of the jigsaw is institutional sponsorship. Timken India has an Accumulation/Distribution Rating of 'A'. This represents heavy institutional buying over the past 13 weeks. The number of institutional sponsors and shares held by the sponsors, both increased in the last reported quarter.
On the earnings front, Timken India has an excellent EPS Rank of 90, which indicates consistency in earnings. The earnings for the stock have grown by 13% over the past three years; however the sales growth remained muted at -1%. Its 3-years earnings stability is 22, on a 0 to 99 scale (lower the better). Over the past five years, the earnings and sales for the stock have grown by 16% and 9%, respectively. The 5-years earnings stability is 18. The return on equity for the last reported year is 10%.
The stock belongs to the industry group of Machinery-Tools & Rel. You would still want to see some improvement in the industry group rank for the group. The current industry group rank is 110. The current price of Timken India is 3% off from its 52-week high price and 66% above its 52-week low price.
The stock appears on our idea lists: Minervini Trend Template