Trade-Ideas LLC identified

E.I. du Pont de Nemours

(

DD

) 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 E.I. du Pont de Nemours as such a stock due to the following factors:

  • DD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $210.8 million.
  • DD has traded 2.0 million shares today.
  • DD is trading at 1.51 times the normal volume for the stock at this time of day.
  • DD 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 DD:

E. I. du Pont de Nemours and Company operates as a science and technology based company. The stock currently has a dividend yield of 2.3%. DD has a PE ratio of 28. Currently there are 5 analysts that rate E.I. du Pont de Nemours a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for E.I. du Pont de Nemours has been 3.0 million shares per day over the past 30 days. E.I. du Pont de Nemours has a market cap of $57.7 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 1.82 and a short float of 0.9% with 2.32 days to cover. Shares are down 3.8% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates E.I. du Pont de Nemours as a

buy

. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, solid stock price performance and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 18.9% when compared to the same quarter one year prior, going from $1,031.00 million to $1,226.00 million.
  • 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. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.31, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has increased to -$1,844.00 million or 13.14% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -20.96%.
  • 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. Although other factors naturally played a role, the company's strong earnings growth was key. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • DU PONT (E I) DE NEMOURS has improved earnings per share by 25.2% 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, DU PONT (E I) DE NEMOURS reported lower earnings of $2.05 versus $3.39 in the prior year. This year, the market expects an improvement in earnings ($3.15 versus $2.05).

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