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Trade-Ideas: Foot Locker (FL) Is Today's "Water-Logged And Getting Wetter" Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Foot Locker (FL) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Foot Locker as such a stock due to the following factors:

  • FL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $72.8 million.
  • FL has traded 1.0 million shares today.
  • FL traded in a range 220.1% of the normal price range with a price range of $1.98.
  • FL traded below its daily resistance level (quality: 119 days, meaning that the stock is crossing a resistance level set by the last 119 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in FL with the Ticky from Trade-Ideas. See the FREE profile for FL NOW at Trade-Ideas

More details on FL:

Foot Locker, Inc., together with its subsidiaries, operates as a retailer of athletic footwear and apparel. The company operates in two segments, Athletic Stores and Direct-to-Customers. The stock currently has a dividend yield of 2.3%. FL has a PE ratio of 12.9. Currently there are 10 analysts that rate Foot Locker a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Foot Locker has been 2.3 million shares per day over the past 30 days. Foot Locker has a market cap of $5.1 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.01 and a short float of 3.1% with 2.04 days to cover. Shares are up 6% year to date as of the close of trading on Thursday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:

  • FOOT LOCKER INC has improved earnings per share by 8.4% 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, FOOT LOCKER INC increased its bottom line by earning $2.59 versus $1.80 in the prior year. This year, the market expects an improvement in earnings ($2.81 versus $2.59).
  • FL's revenue growth trails the industry average of 14.9%. Since the same quarter one year prior, revenues slightly increased by 3.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • FL's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • Net operating cash flow has significantly increased by 88.72% to $251.00 million when compared to the same quarter last year. In addition, FOOT LOCKER INC has also vastly surpassed the industry average cash flow growth rate of 5.74%.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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