Trade-Ideas LLC identified

LKQ

(

LKQ

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

  • LKQ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $53.3 million.
  • LKQ has traded 937,975 shares today.
  • LKQ traded in a range 210.8% of the normal price range with a price range of $1.22.
  • LKQ traded below its daily resistance level (quality: 7 days, meaning that the stock is crossing a resistance level set by the last 7 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 LKQ:

LKQ Corporation, together with its subsidiaries, distributes replacement parts, components, and systems used in the repair and maintenance of vehicles in the United States, the United Kingdom, and internationally. It operates in three segments: North America, Europe, and Specialty. LKQ has a PE ratio of 25. Currently there are 10 analysts that rate LKQ a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for LKQ has been 1.9 million shares per day over the past 30 days. LKQ has a market cap of $10.4 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 0.90 and a short float of 1.3% with 2.87 days to cover. Shares are up 15.3% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates LKQ as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, increase in net income and expanding profit margins. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • LKQ's revenue growth has slightly outpaced the industry average of 1.5%. Since the same quarter one year prior, revenues slightly increased by 3.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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 31.61% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • LKQ CORP has improved earnings per share by 19.2% 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, LKQ CORP increased its bottom line by earning $1.38 versus $1.24 in the prior year. This year, the market expects an improvement in earnings ($1.75 versus $1.38).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Distributors industry. The net income increased by 18.1% when compared to the same quarter one year prior, going from $80.47 million to $95.06 million.
  • 39.96% is the gross profit margin for LKQ CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 5.43% is above that of the industry average.

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