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Roof Leaker To Watch: Invesco (IVZ)

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 Invesco (IVZ) 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 Invesco as such a stock due to the following factors:

  • IVZ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $107.8 million.
  • IVZ has traded 3.1 million shares today.
  • IVZ is trading at 1.67 times the normal volume for the stock at this time of day.
  • IVZ 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 IVZ with the Ticky from Trade-Ideas. See the FREE profile for IVZ NOW at Trade-Ideas

More details on IVZ:

Invesco Ltd. is a publicly owned investment manager. It primarily provides its services to institutional clients including major public entities, corporations, unions, non-profit organizations, endowments, foundations, pension funds, and financial institutions. The stock currently has a dividend yield of 2.6%. IVZ has a PE ratio of 17.5. Currently there are 8 analysts that rate Invesco a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Invesco has been 3.5 million shares per day over the past 30 days. Invesco has a market cap of $14.8 billion and is part of the financial sector and financial services industry. The stock has a beta of 2.16 and a short float of 3.4% with 3.54 days to cover. Shares are down 5.8% 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 Invesco as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 16.7%. Since the same quarter one year prior, revenues rose by 17.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 51.51% and other important driving factors, this stock has surged by 29.04% 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, IVZ should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • INVESCO LTD reported significant earnings per share improvement 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, INVESCO LTD increased its bottom line by earning $1.96 versus $1.45 in the prior year. This year, the market expects an improvement in earnings ($2.41 versus $1.96).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 81.1% when compared to the same quarter one year prior, rising from $158.70 million to $287.40 million.

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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