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Trade-Ideas: TE Connectivity (TEL) 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 TE Connectivity ( TEL) 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 TE Connectivity as such a stock due to the following factors:

  • TEL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $63.3 million.
  • TEL has traded 809,111 shares today.
  • TEL traded in a range 210.1% of the normal price range with a price range of $1.54.
  • TEL traded below its daily resistance level (quality: 35 days, meaning that the stock is crossing a resistance level set by the last 35 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 TEL with the Ticky from Trade-Ideas. See the FREE profile for TEL NOW at Trade-Ideas

More details on TEL:

TE Connectivity Ltd., together with its subsidiaries, designs and manufactures products that connect and protect the flow of power and data inside the products used by consumers and industries. The stock currently has a dividend yield of 1.9%. TEL has a PE ratio of 17.3. Currently there are 5 analysts that rate TE Connectivity a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for TE Connectivity has been 1.7 million shares per day over the past 30 days. TE Connectivity has a market cap of $21.6 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.82 and a short float of 0.5% with 1.67 days to cover. Shares are up 41.2% year to date as of the close of trading on Friday.

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 TE Connectivity as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income, notable return on equity, expanding profit margins and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • Powered by its strong earnings growth of 31.66% and other important driving factors, this stock has surged by 51.49% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, TEL should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • 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 Electronic Equipment, Instruments & Components industry average. The net income increased by 68.3% when compared to the same quarter one year prior, rising from $199.00 million to $335.00 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, TE CONNECTIVITY LTD's return on equity exceeds that of both the industry average and the S&P 500.
  • 37.08% is the gross profit margin for TE CONNECTIVITY LTD which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 9.71% is above that of the industry average.
  • Net operating cash flow has increased to $616.00 million or 21.98% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -1.91%.

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