Trade-Ideas LLC identified

Newell Rubbermaid

(

NWL

) 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 Newell Rubbermaid as such a stock due to the following factors:

  • NWL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $65.9 million.
  • NWL has traded 305,519 shares today.
  • NWL is trading at 2.38 times the normal volume for the stock at this time of day.
  • NWL 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 NWL:

Newell Rubbermaid Inc. manufactures and markets consumer and commercial products worldwide. It operates through five segments: Writing, Home Solutions, Tools, Commercial Products, and Baby & Parenting. The stock currently has a dividend yield of 1.9%. NWL has a PE ratio of 29. Currently there are 12 analysts that rate Newell Rubbermaid a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Newell Rubbermaid has been 1.6 million shares per day over the past 30 days. Newell Rubbermaid has a market cap of $10.8 billion and is part of the consumer goods sector and consumer durables industry. The stock has a beta of 0.87 and a short float of 3.8% with 5.52 days to cover. Shares are up 6.8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Newell Rubbermaid as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, 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 sub par growth in net income.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.5%. Since the same quarter one year prior, revenues slightly increased by 3.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Household Durables industry and the overall market, NEWELL RUBBERMAID INC's return on equity exceeds that of both the industry average and the S&P 500.
  • 42.75% is the gross profit margin for NEWELL RUBBERMAID INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 9.51% is above that of the industry average.
  • Net operating cash flow has slightly increased to $102.50 million or 6.54% when compared to the same quarter last year. In addition, NEWELL RUBBERMAID INC has also vastly surpassed the industry average cash flow growth rate of -88.51%.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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.

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