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Today's Water-Logged And Getting Wetter Stock: Cabela's (CAB)

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 Cabela's (CAB) 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 Cabela's as such a stock due to the following factors:

  • CAB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $55.8 million.
  • CAB has traded 883,580 shares today.
  • CAB traded in a range 220.4% of the normal price range with a price range of $2.92.
  • CAB traded below its daily resistance level (quality: 181 days, meaning that the stock is crossing a resistance level set by the last 181 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.

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More details on CAB:

Cabela's Incorporated, together with its subsidiaries, operates as a specialty retailer and direct marketer of hunting, fishing, camping, and related outdoor merchandise. The company operates through three segments: Retail, Direct, and Financial Services. CAB has a PE ratio of 22.0. Currently there are 4 analysts that rate Cabela's a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Cabela's has been 627,200 shares per day over the past 30 days. Cabela's has a market cap of $4.5 billion and is part of the services sector and specialty retail industry. The stock has a beta of 1.92 and a short float of 16.3% with 8.34 days to cover. Shares are up 51.4% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cabela's as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • CAB's revenue growth has slightly outpaced the industry average of 19.9%. Since the same quarter one year prior, revenues rose by 20.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • CABELAS INC has improved earnings per share by 31.9% 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, CABELAS INC increased its bottom line by earning $2.42 versus $2.02 in the prior year. This year, the market expects an improvement in earnings ($3.44 versus $2.42).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Specialty Retail industry average. The net income increased by 31.5% when compared to the same quarter one year prior, rising from $33.87 million to $44.55 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 Specialty Retail industry and the overall market on the basis of return on equity, CABELAS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • 45.28% is the gross profit margin for CABELAS INC which we consider to be strong. Regardless of CAB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.89% trails the industry average.

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