Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.
Trade-Ideas LLC identified
) 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 General Dynamics as such a stock due to the following factors:
- GD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $160.2 million.
- GD has traded 1.0 million shares today.
- GD traded in a range 216.4% of the normal price range with a price range of $2.55.
- GD traded below its daily resistance level (quality: 13 days, meaning that the stock is crossing a resistance level set by the last 13 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 GD:
General Dynamics Corporation, an aerospace and defense company, provides business aviation; combat vehicles, weapons systems, and munitions; military and commercial shipbuilding; and communications and information technology products and services worldwide. The stock currently has a dividend yield of 2.4%. Currently there are 12 analysts that rate General Dynamics a buy, no analysts rate it a sell, and 3 rate it a hold.
The average volume for General Dynamics has been 1.4 million shares per day over the past 30 days. General Dynamics has a market cap of $33.6 billion and is part of the industrial goods sector and aerospace/defense industry. The stock has a beta of 1.01 and a short float of 1.1% with 1.75 days to cover. Shares are down 0.3% year-to-date as of the close of trading on Tuesday.
rates General Dynamics as a
. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, largely solid financial position with reasonable debt levels by most measures and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 36.67% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, GD should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- GENERAL DYNAMICS CORP has improved earnings per share by 8.2% 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, GENERAL DYNAMICS CORP swung to a loss, reporting -$1.03 versus $6.94 in the prior year. This year, the market expects an improvement in earnings ($7.02 versus -$1.03).
- The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that GD's debt-to-equity ratio is low, the quick ratio, which is currently 0.70, displays a potential problem in covering short-term cash needs.
- GD, with its decline in revenue, underperformed when compared the industry average of 9.6%. Since the same quarter one year prior, revenues slightly dropped by 1.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Aerospace & Defense industry average. The net income increased by 8.5% when compared to the same quarter one year prior, going from $600.00 million to $651.00 million.
- You can view the full General Dynamics Ratings Report.