Trade-Ideas LLC identified Ecolab ( ECL) 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 Ecolab as such a stock due to the following factors:

  • ECL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $132.7 million.
  • ECL has traded 67,964 shares today.
  • ECL traded in a range 230.4% of the normal price range with a price range of $3.03.
  • ECL traded below its daily resistance level (quality: 19 days, meaning that the stock is crossing a resistance level set by the last 19 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 ECL with the Ticky from Trade-Ideas. See the FREE profile for ECL NOW at Trade-Ideas

More details on ECL: Ecolab Inc. provides water, hygiene, and energy technologies and services for customers worldwide. The company operates in three segments: Global Industrial, Global Institutional, and Global Energy. The stock currently has a dividend yield of 1.2%. ECL has a PE ratio of 35. Currently there are 8 analysts that rate Ecolab a buy, 1 analyst rates it a sell, and 6 rate it a hold. The average volume for Ecolab has been 1.4 million shares per day over the past 30 days. Ecolab has a market cap of $34.0 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.15 and a short float of 2.7% with 6.00 days to cover. Shares are down 0.1% year-to-date as of the close of trading on Monday.

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 Ecolab as a

buy

. The company's strengths can be seen in multiple areas, such as its expanding profit margins, largely solid financial position with reasonable debt levels by most measures 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:

  • The gross profit margin for ECOLAB INC is rather high; currently it is at 53.80%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.12% trails the industry average.
  • The debt-to-equity ratio is somewhat low, currently at 0.94, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that ECL's debt-to-equity ratio is low, the quick ratio, which is currently 0.55, displays a potential problem in covering short-term cash needs.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.7%. Since the same quarter one year prior, revenues slightly dropped by 7.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • ECOLAB INC's earnings per share declined by 37.3% 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, ECOLAB INC reported lower earnings of $3.32 versus $3.93 in the prior year. This year, the market expects an improvement in earnings ($4.45 versus $3.32).
  • After a year of stock price fluctuations, the net result is that ECL's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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.

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.