Trade-Ideas: PepsiCo (PEP) Is Today's "Roof Leaker" 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 PepsiCo (PEP) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified PepsiCo as such a stock due to the following factors:
- PEP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $383.4 million.
- PEP has traded 623,185 shares today.
- PEP is trading at 1.56 times the normal volume for the stock at this time of day.
- PEP crossed below its 200-day simple moving average.
'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.EXCLUSIVE OFFER: Get the inside scoop on opportunities in PEP with the Ticky from Trade-Ideas. See the FREE profile for PEP NOW at Trade-IdeasMore details on PEP: PepsiCo, Inc. operates as a food and beverage company worldwide. The stock currently has a dividend yield of 2.8%. PEP has a PE ratio of 19.0. Currently there are 10 analysts that rate PepsiCo a buy, no analysts rate it a sell, and 4 rate it a hold.The average volume for PepsiCo has been 4.7 million shares per day over the past 30 days. PepsiCo has a market cap of $124.2 billion and is part of the consumer goods sector and food & beverage industry. Shares are up 17.7% year to date as of the close of trading on Tuesday.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 PepsiCo as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year, reasonable valuation levels, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.Highlights from the ratings report include:
- PEP's revenue growth has slightly outpaced the industry average of 0.9%. Since the same quarter one year prior, revenues slightly increased by 2.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- Net operating cash flow has increased to $2,313.00 million or 19.41% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -8.62%.
- The gross profit margin for PEPSICO INC is rather high; currently it is at 56.62%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, PEP's net profit margin of 11.95% significantly trails the industry average.
- You can view the full PepsiCo Ratings Report.
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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