Trade-Ideas LLC identified

Middleby

(

MIDD

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

  • MIDD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $52.5 million.
  • MIDD has traded 36,233 shares today.
  • MIDD is trading at 4.62 times the normal volume for the stock at this time of day.
  • MIDD 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 MIDD with the Ticky from Trade-Ideas. See the FREE profile for MIDD NOW at Trade-Ideas

More details on MIDD:

The Middleby Corporation designs, manufactures, markets, distributes, and services commercial foodservice and food processing, and residential kitchen equipment in the United States, Canada, Asia, Europe, the Middle East, and Latin America. MIDD has a PE ratio of 34. Currently there are 3 analysts that rate Middleby a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Middleby has been 309,300 shares per day over the past 30 days. Middleby has a market cap of $6.9 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.54 and a short float of 4.9% with 5.90 days to cover. Shares are up 13.9% year-to-date as of the close of trading on Wednesday.

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 Middleby as a

buy

. 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, solid stock price performance and expanding profit margins. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 19.4%. Since the same quarter one year prior, revenues rose by 11.1%. 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.
  • The debt-to-equity ratio is somewhat low, currently at 0.67, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that MIDD's debt-to-equity ratio is low, the quick ratio, which is currently 0.68, displays a potential problem in covering short-term cash needs.
  • Compared to its closing price of one year ago, MIDD's share price has jumped by 27.99%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • MIDDLEBY CORP's earnings per share declined by 18.1% in the most recent quarter compared to 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, MIDDLEBY CORP increased its bottom line by earning $3.40 versus $2.73 in the prior year. This year, the market expects an improvement in earnings ($3.95 versus $3.40).
  • 39.46% is the gross profit margin for MIDDLEBY CORP which we consider to be strong. Regardless of MIDD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MIDD's net profit margin of 10.87% compares favorably to the industry average.

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.