Trade-Ideas LLC identified

Molson Coors Brewing

(

TAP

) 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 Molson Coors Brewing as such a stock due to the following factors:

  • TAP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $223.4 million.
  • TAP has traded 3.9 million shares today.
  • TAP is trading at 7.49 times the normal volume for the stock at this time of day.
  • TAP 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.

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More details on TAP:

Molson Coors Brewing Company manufactures and sells beer and other beverage products. The stock currently has a dividend yield of 1.6%. TAP has a PE ratio of 45. Currently there are 3 analysts that rate Molson Coors Brewing a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Molson Coors Brewing has been 1.5 million shares per day over the past 30 days. Molson Coors Brewing has a market cap of $21.7 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.89 and a short float of 2.1% with 1.53 days to cover. Shares are up 4.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Molson Coors Brewing as a

buy

. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Beverages industry. The net income increased by 95.8% when compared to the same quarter one year prior, rising from $81.10 million to $158.80 million.
  • The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 2.76, which clearly demonstrates the ability to cover short-term cash needs.
  • 45.82% is the gross profit margin for MOLSON COORS BREWING CO which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 24.16% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 53.89% to -$93.40 million when compared to the same quarter last year. In addition, MOLSON COORS BREWING CO has also vastly surpassed the industry average cash flow growth rate of 0.31%.
  • Powered by its strong earnings growth of 85.71% and other important driving factors, this stock has surged by 40.39% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.

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