Trade-Ideas LLC identified

Beacon Roofing Supply

(

BECN

) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Beacon Roofing Supply as such a stock due to the following factors:

  • BECN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $23.0 million.
  • BECN has traded 53,055 shares today.
  • BECN is trading at 2.28 times the normal volume for the stock at this time of day.
  • BECN is trading at a new high 5.15% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on BECN:

Beacon Roofing Supply, Inc., together with its subsidiaries, distributes residential and non-residential roofing materials, and other complementary building materials to contractors, home builders, building owners, and other resellers. BECN has a PE ratio of 3. Currently there are 6 analysts that rate Beacon Roofing Supply a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Beacon Roofing Supply has been 567,800 shares per day over the past 30 days. Beacon Roofing Supply has a market cap of $2.0 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.35 and a short float of 4.1% with 3.41 days to cover. Shares are down 17.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Beacon Roofing Supply as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • BECN's very impressive revenue growth greatly exceeded the industry average of 3.9%. Since the same quarter one year prior, revenues leaped by 63.8%. 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.
  • The debt-to-equity ratio is somewhat low, currently at 0.93, 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 1.02, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has increased to $44.68 million or 11.16% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -4.28%.
  • BEACON ROOFING SUPPLY INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, BEACON ROOFING SUPPLY INC increased its bottom line by earning $1.23 versus $1.07 in the prior year. This year, the market expects an improvement in earnings ($1.89 versus $1.23).
  • 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. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

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