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
) 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 Alcoa as such a stock due to the following factors:
- AA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $188.8 million.
- AA has traded 3.3 million shares today.
- AA is trading at 1.51 times the normal volume for the stock at this time of day.
- AA 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 AA:
Alcoa Inc. produces and manages primary aluminum, fabricated aluminum, and alumina. The company operates in four segments: Alumina, Primary Metals, Global Rolled Products, and Engineered Products and Solutions. The stock currently has a dividend yield of 0.8%. Currently there are 10 analysts that rate Alcoa a buy, 1 analyst rates it a sell, and 5 rate it a hold.
The average volume for Alcoa has been 18.9 million shares per day over the past 30 days. Alcoa has a market cap of $18.6 billion and is part of the basic materials sector and metals & mining industry. The stock has a beta of 1.01 and a short float of 3.6% with 2.68 days to cover. Shares are unchanged year-to-date as of the close of trading on Friday.
rates Alcoa as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, increase in net income, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- AA's revenue growth has slightly outpaced the industry average of 3.5%. Since the same quarter one year prior, revenues slightly increased by 8.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Powered by its strong earnings growth of 500.00% and other important driving factors, this stock has surged by 52.22% 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, AA should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 520.8% when compared to the same quarter one year prior, rising from $24.00 million to $149.00 million.
- Net operating cash flow has increased to $249.00 million or 16.35% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -31.21%.
- ALCOA INC reported significant earnings per share improvement 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, ALCOA INC swung to a loss, reporting -$2.15 versus $0.17 in the prior year. This year, the market expects an improvement in earnings ($0.83 versus -$2.15).
- You can view the full Alcoa Ratings Report.