Roof Leaker To Watch: AvalonBay Communities (AVB)
Trade-Ideas LLC identified
(
) 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 AvalonBay Communities as such a stock due to the following factors:
- AVB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $138.8 million.
- AVB has traded 144,970 shares today.
- AVB is trading at 1.62 times the normal volume for the stock at this time of day.
- AVB 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.
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More details on AVB:
AvalonBay Communities, Inc. engages in the development, redevelopment, acquisition, ownership, and operation of multifamily communities in the United States. The stock currently has a dividend yield of 2.8%. AVB has a PE ratio of 32. Currently there are 8 analysts that rate AvalonBay Communities a buy, no analysts rate it a sell, and 6 rate it a hold.
The average volume for AvalonBay Communities has been 775,400 shares per day over the past 30 days. AvalonBay has a market cap of $24.3 billion and is part of the financial sector and real estate industry. The stock has a beta of 0.07 and a short float of 1.8% with 2.51 days to cover. Shares are up 5.8% year-to-date as of the close of trading on Friday.
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Analysis:
rates AvalonBay Communities as a
. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins, solid stock price performance and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- Net operating cash flow has increased to $302.37 million or 30.49% when compared to the same quarter last year. In addition, AVALONBAY COMMUNITIES INC has also vastly surpassed the industry average cash flow growth rate of -24.80%.
- 42.28% is the gross profit margin for AVALONBAY COMMUNITIES INC which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, AVB's net profit margin of 41.56% significantly outperformed against the industry.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. 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.
- AVALONBAY COMMUNITIES INC's earnings per share declined by 16.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, AVALONBAY COMMUNITIES INC increased its bottom line by earning $4.92 versus $0.45 in the prior year. This year, the market expects an improvement in earnings ($5.08 versus $4.92).
- AVB, with its decline in revenue, underperformed when compared the industry average of 6.0%. Since the same quarter one year prior, revenues fell by 11.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full AvalonBay Communities Ratings Report.
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