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.

Trade-Ideas LLC identified

Hanesbrands

(

HBI

) 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 Hanesbrands as such a stock due to the following factors:

  • HBI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $72.5 million.
  • HBI has traded 678,355 shares today.
  • HBI traded in a range 201.5% of the normal price range with a price range of $1.19.
  • HBI traded below its daily resistance level (quality: 160 days, meaning that the stock is crossing a resistance level set by the last 160 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 HBI:

Hanesbrands Inc., a consumer goods company, designs, manufactures, sources, and sells a range of basic apparels for men, women, and children in the United States. The company operates through four segments: Innerwear, Activewear, Direct to Consumer, and International. The stock currently has a dividend yield of 1.2%. HBI has a PE ratio of 33. Currently there are 8 analysts that rate Hanesbrands a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Hanesbrands has been 2.4 million shares per day over the past 30 days. Hanesbrands has a market cap of $13.3 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.24 and a short float of 3% with 4.34 days to cover. Shares are up 20.9% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Hanesbrands as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:

  • HBI's revenue growth has slightly outpaced the industry average of 9.9%. Since the same quarter one year prior, revenues rose by 14.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • HANESBRANDS INC has improved earnings per share by 26.8% 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. During the past fiscal year, HANESBRANDS INC increased its bottom line by earning $0.99 versus $0.81 in the prior year. This year, the market expects an improvement in earnings ($1.65 versus $0.99).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Textiles, Apparel & Luxury Goods industry average. The net income increased by 26.6% when compared to the same quarter one year prior, rising from $41.56 million to $52.64 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Textiles, Apparel & Luxury Goods industry and the overall market, HANESBRANDS INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • 40.11% is the gross profit margin for HANESBRANDS INC which we consider to be strong. 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 4.35% trails the industry average.

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