Trade-Ideas: Dover Corporation (DOV) 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 Dover Corporation (DOV) 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 Dover Corporation as such a stock due to the following factors:
- DOV has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $109.1 million.
- DOV has traded 170,368 shares today.
- DOV is trading at 2.15 times the normal volume for the stock at this time of day.
- DOV 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 DOV with the Ticky from Trade-Ideas. See the FREE profile for DOV NOW at Trade-IdeasMore details on DOV: Dover Corporation manufactures and sells a range of specialized products and components, and provides related consumables and services. The company operates in four segments: Communication Technologies, Energy, Engineered Systems, and Printing and Identification. The stock currently has a dividend yield of 1.7%. DOV has a PE ratio of 16.9. Currently there are 11 analysts that rate Dover Corporation a buy, no analysts rate it a sell, and 3 rate it a hold.The average volume for Dover Corporation has been 859,800 shares per day over the past 30 days. Dover has a market cap of $15.2 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.37 and a short float of 2.2% with 2.70 days to cover. Shares are down 10.3% 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 Dover Corporation as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, solid stock price performance and growth in earnings per share. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 19.1%. Since the same quarter one year prior, revenues slightly increased by 9.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The current debt-to-equity ratio, 0.53, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.34, which illustrates the ability to avoid short-term cash problems.
- 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 Machinery industry and the overall market, DOVER CORP's return on equity exceeds that of both the industry average and the S&P 500.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 29.13% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DOV should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- DOVER CORP has improved earnings per share by 5.2% 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, DOVER CORP increased its bottom line by earning $5.57 versus $4.53 in the prior year. This year, the market expects an improvement in earnings ($5.91 versus $5.57).
- You can view the full Dover Corporation 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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