Trade-Ideas LLC identified

PACCAR

(

PCAR

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

  • PCAR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $129.9 million.
  • PCAR has traded 1.6 million shares today.
  • PCAR traded in a range 211.8% of the normal price range with a price range of $2.96.
  • PCAR traded below its daily resistance level (quality: 136 days, meaning that the stock is crossing a resistance level set by the last 136 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 PCAR:

PACCAR Inc, together with its subsidiaries, designs, manufactures, and distributes light, medium, and heavy-duty commercial trucks worldwide. It operates in three segments: Truck, Parts, and Financial Services. The stock currently has a dividend yield of 1.7%. PCAR has a PE ratio of 32. Currently there are 6 analysts that rate PACCAR a buy, 2 analysts rate it a sell, and 8 rate it a hold.

The average volume for PACCAR has been 2.1 million shares per day over the past 30 days. PACCAR has a market cap of $19.7 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 1.09 and a short float of 4.7% with 6.11 days to cover. Shares are up 9.6% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates PACCAR as a

buy

. Among the primary strengths of the company is its generally strong cash flow from operations. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • Net operating cash flow has significantly increased by 67.11% to $795.80 million when compared to the same quarter last year. In addition, PACCAR INC has also vastly surpassed the industry average cash flow growth rate of -10.44%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 12.9%. Since the same quarter one year prior, revenues fell by 11.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • PACCAR INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, PACCAR INC increased its bottom line by earning $4.51 versus $3.82 in the prior year. For the next year, the market is expecting a contraction of 13.5% in earnings ($3.90 versus $4.51).
  • The gross profit margin for PACCAR INC is rather low; currently it is at 22.74%. Regardless of PCAR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, PCAR's net profit margin of -13.82% significantly underperformed when compared to the industry average.
  • The share price of PACCAR INC has not done very well: it is down 13.39% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Despite the stock's decline during the last year, it is still somewhat more expensive (in proportion to its earnings over the last year) than most other stocks in its industry. We feel, however, that other strengths this company displays offset this slight negative.

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