Sherwin-Williams (SHW) Shows Signs Of Being Water-Logged And Getting Wetter
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.
Trade-Ideas LLC identified
(
) 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 Sherwin-Williams as such a stock due to the following factors:
- SHW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $164.1 million.
- SHW has traded 338,700 shares today.
- SHW traded in a range 203.7% of the normal price range with a price range of $8.31.
- SHW traded below its daily resistance level (quality: 35 days, meaning that the stock is crossing a resistance level set by the last 35 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 SHW:
The Sherwin-Williams Company develops, manufactures, distributes, and sells paints, coatings, and related products to professional, industrial, commercial, and retail customers primarily in North and South America. The stock currently has a dividend yield of 0.9%. SHW has a PE ratio of 32.8. Currently there are 5 analysts that rate Sherwin-Williams a buy, 1 analyst rates it a sell, and 6 rate it a hold.
The average volume for Sherwin-Williams has been 599,500 shares per day over the past 30 days. Sherwin-Williams has a market cap of $27.4 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 0.30 and a short float of 5% with 6.05 days to cover. Shares are up 8.8% year-to-date as of the close of trading on Tuesday.
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Analysis:
rates Sherwin-Williams as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, solid stock price performance, impressive record of earnings per share growth and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
Highlights from the ratings report include:
- SHW's revenue growth has slightly outpaced the industry average of 4.8%. Since the same quarter one year prior, revenues slightly increased by 4.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 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 39.65% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- SHERWIN-WILLIAMS CO has improved earnings per share by 20.2% 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, SHERWIN-WILLIAMS CO increased its bottom line by earning $8.80 versus $7.26 in the prior year. This year, the market expects an improvement in earnings ($11.15 versus $8.80).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Chemicals industry average. The net income increased by 14.3% when compared to the same quarter one year prior, going from $116.12 million to $132.74 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Chemicals industry and the overall market, SHERWIN-WILLIAMS CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
- You can view the full Sherwin-Williams Ratings Report.
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