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 "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 HollyFrontier as such a stock due to the following factors:
- HFC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $129.8 million.
- HFC has traded 1.6 million shares today.
- HFC is trading at 2.11 times the normal volume for the stock at this time of day.
- HFC 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.
EXCLUSIVE OFFER: Get the inside scoop on opportunities in HFC with the Ticky from Trade-Ideas. See the FREE profile for HFC NOW at Trade-Ideas
More details on HFC:
HollyFrontier Corporation operates as an independent petroleum refiner and marketer in the United States. It produces light products, such as gasoline, diesel fuel, jet fuel, specialty lubricant products, liquefied petroleum gas, fuel oil, and specialty and modified asphalt. The stock currently has a dividend yield of 2.5%. HFC has a PE ratio of 13.2. Currently there are 3 analysts that rate HollyFrontier a buy, no analysts rate it a sell, and 8 rate it a hold.
The average volume for HollyFrontier has been 3.2 million shares per day over the past 30 days. HollyFrontier has a market cap of $9.6 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.73 and a short float of 7.9% with 5.21 days to cover. Shares are down 5.3% year-to-date as of the close of trading on Wednesday.
rates HollyFrontier as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- HFC's revenue growth has slightly outpaced the industry average of 3.3%. Since the same quarter one year prior, revenues slightly increased by 2.4%. 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.
- HFC's debt-to-equity ratio is very low at 0.16 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.47, which illustrates the ability to avoid short-term cash problems.
- HOLLYFRONTIER CORP 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, HOLLYFRONTIER CORP increased its bottom line by earning $8.41 versus $6.12 in the prior year. For the next year, the market is expecting a contraction of 56.4% in earnings ($3.66 versus $8.41).
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, HOLLYFRONTIER CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- You can view the full HollyFrontier Ratings Report.