Trade-Ideas LLC identified

BorgWarner

(

BWA

) 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 BorgWarner as such a stock due to the following factors:

  • BWA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $117.9 million.
  • BWA has traded 526,462 shares today.
  • BWA traded in a range 394.8% of the normal price range with a price range of $4.98.
  • BWA traded below its daily resistance level (quality: 1 day, meaning that the stock is crossing a resistance level set by the last 1 calendar day. 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in BWA with the Ticky from Trade-Ideas. See the FREE profile for BWA NOW at Trade-Ideas

More details on BWA:

TheStreet Recommends

BorgWarner Inc. manufactures and sells engineered automotive systems and components primarily for powertrain applications worldwide. The stock currently has a dividend yield of 1.2%. BWA has a PE ratio of 16. Currently there are 9 analysts that rate BorgWarner a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for BorgWarner has been 2.7 million shares per day over the past 30 days. BorgWarner has a market cap of $9.9 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 1.50 and a short float of 4.9% with 4.08 days to cover. Shares are down 17.1% year-to-date as of the close of trading on Wednesday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates BorgWarner as a

buy

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • The current debt-to-equity ratio, 0.49, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, BWA has a quick ratio of 1.64, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has slightly increased to $286.60 million or 2.43% when compared to the same quarter last year. In addition, BORGWARNER INC has also modestly surpassed the industry average cash flow growth rate of -1.23%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Auto Components industry and the overall market on the basis of return on equity, BORGWARNER INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • BORGWARNER INC's earnings per share declined by 21.7% 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, BORGWARNER INC increased its bottom line by earning $2.86 versus $2.71 in the prior year. This year, the market expects an improvement in earnings ($2.98 versus $2.86).
  • BWA, with its decline in revenue, slightly underperformed the industry average of 5.4%. Since the same quarter one year prior, revenues slightly dropped by 7.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.