Trade-Ideas LLC identified

Hershey

(

HSY

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

  • HSY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $75.7 million.
  • HSY has traded 2.1 million shares today.
  • HSY traded in a range 216.4% of the normal price range with a price range of $3.01.
  • HSY traded below its daily resistance level (quality: 55 days, meaning that the stock is crossing a resistance level set by the last 55 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 HSY with the Ticky from Trade-Ideas. See the FREE profile for HSY NOW at Trade-Ideas

More details on HSY:

TST Recommends

The Hershey Company manufactures, imports, markets, distributes, and sells confectionery products. The company operates through two segments, North America; and International and Other. The stock currently has a dividend yield of 2.5%. HSY has a PE ratio of 37. Currently there are 2 analysts that rate Hershey a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for Hershey has been 1.1 million shares per day over the past 30 days. Hershey has a market cap of $15.1 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.82 and a short float of 3.8% with 6.40 days to cover. Shares are down 9.2% year-to-date as of the close of trading on Tuesday.

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 Hershey as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and premium valuation.

Highlights from the ratings report include:

  • HSY's revenue growth has slightly outpaced the industry average of 8.2%. Since the same quarter one year prior, revenues slightly increased by 0.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 805.56% to $224.55 million when compared to the same quarter last year. In addition, HERSHEY CO has also vastly surpassed the industry average cash flow growth rate of 4.30%.
  • HERSHEY CO has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, HERSHEY CO increased its bottom line by earning $3.77 versus $3.61 in the prior year. This year, the market expects an improvement in earnings ($4.14 versus $3.77).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Food Products industry. The net income has significantly decreased by 159.4% when compared to the same quarter one year ago, falling from $168.17 million to -$99.94 million.
  • The debt-to-equity ratio is very high at 2.10 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.42, which clearly demonstrates the inability to cover short-term cash needs.

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.