Trade-Ideas LLC identified

Fresh Market

(

TFM

) 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 Fresh Market as such a stock due to the following factors:

  • TFM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $56.9 million.
  • TFM has traded 1.2 million shares today.
  • TFM traded in a range 267.3% of the normal price range with a price range of $0.19.
  • TFM 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.

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More details on TFM:

The Fresh Market, Inc. operates as a specialty grocery retailer in the United States. TFM has a PE ratio of 21. Currently there are 2 analysts that rate Fresh Market a buy, 2 analysts rate it a sell, and 9 rate it a hold.

The average volume for Fresh Market has been 1.8 million shares per day over the past 30 days. Fresh Market has a market cap of $1.3 billion and is part of the services sector and retail industry. The stock has a beta of 1.75 and a short float of 7.2% with 1.56 days to cover. Shares are up 21.9% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Fresh Market as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share and increase in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 6.9%. Since the same quarter one year prior, revenues slightly increased by 8.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • FRESH MARKET INC has improved earnings per share by 14.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, FRESH MARKET INC increased its bottom line by earning $1.36 versus $1.31 in the prior year. This year, the market expects an improvement in earnings ($1.56 versus $1.36).
  • TFM's debt-to-equity ratio is very low at 0.09 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that TFM's debt-to-equity ratio is low, the quick ratio, which is currently 0.54, displays a potential problem in covering short-term cash needs.
  • Net operating cash flow has declined marginally to $41.00 million or 8.51% when compared to the same quarter last year. Despite a decrease in cash flow of 8.51%, FRESH MARKET INC is in line with the industry average cash flow growth rate of -11.13%.
  • TFM's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 25.73%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

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