Roof Leaker To Watch: Dover (DOV)
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 (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 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 $56.8 million.
- DOV has traded 938,750 shares today.
- DOV is trading at 2.62 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 and its subsidiaries manufacture and sell a range of equipment and components, specialty systems, and support services. The company operates in four segments: Energy, Engineered Systems, Fluids, and Refrigeration & Food Equipment. The stock currently has a dividend yield of 1.7%. DOV has a PE ratio of 15.9. Currently there are 9 analysts that rate Dover a buy, no analysts rate it a sell, and 4 rate it a hold.The average volume for Dover has been 819,200 shares per day over the past 30 days. Dover has a market cap of $14.9 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.52 and a short float of 1.7% with 4.66 days to cover. Shares are down 7.2% year-to-date as of the close of trading on Wednesday.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 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, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 6.2%. Since the same quarter one year prior, revenues slightly increased by 6.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.71, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.40, which illustrates the ability to avoid short-term cash problems.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Machinery industry and the overall market, DOVER CORP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- 43.30% is the gross profit margin for DOVER CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 8.49% is above that of the industry average.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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.
- You can view the full Dover 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.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV