Watch For Today's Momo Momentum Stock: Weyerhaeuser (WY)

Trade-Ideas LLC identified Weyerhaeuser (WY) as a momo momentum candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Weyerhaeuser

(

WY

) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Weyerhaeuser as such a stock due to the following factors:

  • WY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $257.5 million.
  • WY has a PE ratio of 33.
  • WY is currently in the upper 30% of its 1-year range.
  • WY is in the upper 25% of its 20-day range.
  • WY is in the upper 35% of its 5-day range.
  • WY is currently trading above yesterday's high.
  • WY has experienced a gap between today's open and yesterday's close of 0.9%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on WY:

Weyerhaeuser Co. is a real estate investment trust. It primarily invests in United States. The firm operates under four business segments, timberlands, wood products, cellulose fibers and real estate. It owns timberlands primarily in the U.S and has long-term licenses in Canada. The stock currently has a dividend yield of 4.1%. WY has a PE ratio of 33. Currently there are 6 analysts that rate Weyerhaeuser a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Weyerhaeuser has been 5.4 million shares per day over the past 30 days. Weyerhaeuser has a market cap of $22.5 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.39 and a short float of 2% with 1.86 days to cover. Shares are up 0.5% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Weyerhaeuser as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth and reasonable valuation levels. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.9%. Since the same quarter one year prior, revenues slightly increased by 6.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • WEYERHAEUSER CO's earnings per share declined by 35.3% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, WEYERHAEUSER CO reported lower earnings of $0.89 versus $1.38 in the prior year. This year, the market expects an improvement in earnings ($0.95 versus $0.89).
  • The share price of WEYERHAEUSER CO has not done very well: it is down 5.50% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
  • The gross profit margin for WEYERHAEUSER CO is currently lower than what is desirable, coming in at 27.36%. Regardless of WY's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, WY's net profit margin of 4.41% is significantly lower than the industry average.

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