Trade-Ideas LLC identified

L-3 Communications Holdings

(

LLL

) 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 L-3 Communications Holdings as such a stock due to the following factors:

  • LLL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $76.0 million.
  • LLL has traded 538,506 shares today.
  • LLL traded in a range 352% of the normal price range with a price range of $7.03.
  • LLL traded below its daily resistance level (quality: 10 days, meaning that the stock is crossing a resistance level set by the last 10 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 LLL with the Ticky from Trade-Ideas. See the FREE profile for LLL NOW at Trade-Ideas

More details on LLL:

L-3 Communications Holdings, Inc., through its subsidiary, L-3 Communications Corporation, provides intelligence, surveillance, and reconnaissance (ISR) systems; aircraft sustainment; and simulation and training products and services in the United States and internationally. The stock currently has a dividend yield of 2.1%. LLL has a PE ratio of 88. Currently there are 2 analysts that rate L-3 Communications Holdings a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for L-3 Communications Holdings has been 646,400 shares per day over the past 30 days. L-3 has a market cap of $9.9 billion and is part of the industrial goods sector and aerospace/defense industry. The stock has a beta of 1.25 and a short float of 2.7% with 3.44 days to cover. Shares are down 0.1% year-to-date as of the close of trading on Monday.

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 L-3 Communications Holdings as a

buy

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:

  • The debt-to-equity ratio is somewhat low, currently at 0.86, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.09, which illustrates the ability to avoid short-term cash problems.
  • LLL, with its decline in revenue, slightly underperformed the industry average of 1.7%. Since the same quarter one year prior, revenues slightly dropped by 4.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • After a year of stock price fluctuations, the net result is that LLL's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The gross profit margin for L-3 COMMUNICATIONS HLDGS INC is currently extremely low, coming in at 14.34%. Regardless of LLL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, LLL's net profit margin of -10.61% significantly underperformed when compared to the industry average.
  • Net operating cash flow has decreased to $317.00 million or 18.71% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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.