Trade-Ideas LLC identified

Eagle Materials

(

EXP

) 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 Eagle Materials as such a stock due to the following factors:

  • EXP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $38.5 million.
  • EXP has traded 56,589 shares today.
  • EXP traded in a range 239.8% of the normal price range with a price range of $4.26.
  • EXP traded below its daily resistance level (quality: 33 days, meaning that the stock is crossing a resistance level set by the last 33 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.

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

More details on EXP:

Eagle Materials Inc. produces and sells construction products and building materials used in residential, industrial, commercial, and infrastructure construction; and products used in oil and natural gas extraction in the United States. The stock currently has a dividend yield of 0.5%. EXP has a PE ratio of 24. Currently there are 5 analysts that rate Eagle Materials a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Eagle Materials has been 629,700 shares per day over the past 30 days. Eagle has a market cap of $3.8 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.14 and a short float of 4% with 3.60 days to cover. Shares are up 24.4% 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 Eagle Materials as a

buy

. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Net operating cash flow has significantly increased by 65.97% to $108.70 million when compared to the same quarter last year. Despite an increase in cash flow, EAGLE MATERIALS INC's cash flow growth rate is still lower than the industry average growth rate of 92.33%.
  • The gross profit margin for EAGLE MATERIALS INC is currently lower than what is desirable, coming in at 33.91%. Regardless of EXP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, EXP's net profit margin of 16.52% significantly outperformed against the industry.
  • The revenue fell significantly faster than the industry average of 30.9%. Since the same quarter one year prior, revenues slightly dropped by 4.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.48, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.08 is sturdy.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Construction Materials industry and the overall market, EAGLE MATERIALS INC's return on equity exceeds that of both the industry average and the S&P 500.

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.