Trade-Ideas LLC identified

Quanta Services

(

PWR

) 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 Quanta Services as such a stock due to the following factors:

  • PWR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $68.5 million.
  • PWR has traded 2.5 million shares today.
  • PWR traded in a range 209.7% of the normal price range with a price range of $1.12.
  • PWR traded below its daily resistance level (quality: 6 days, meaning that the stock is crossing a resistance level set by the last 6 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 PWR:

Quanta Services, Inc. provides specialty contracting services to the electric power, and oil and gas industries in North America and internationally. PWR has a PE ratio of 23. Currently there are 7 analysts that rate Quanta Services a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Quanta Services has been 4.1 million shares per day over the past 30 days. Quanta Services has a market cap of $3.5 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 0.62 and a short float of 9.6% with 6.17 days to cover. Shares are down 19.2% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Quanta Services as a

hold

. 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 and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and poor profit margins.

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 Construction & Engineering industry. The net income increased by 128.6% when compared to the same quarter one year prior, rising from $94.65 million to $216.39 million.
  • PWR's debt-to-equity ratio is very low at 0.11 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.31, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has significantly increased by 68.77% to $110.21 million when compared to the same quarter last year. Despite an increase in cash flow, QUANTA SERVICES INC's cash flow growth rate is still lower than the industry average growth rate of 100.30%.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 35.84%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 42.50% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, PWR is still more expensive than most of the other companies in its industry.
  • QUANTA SERVICES INC's earnings per share declined by 42.5% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, QUANTA SERVICES INC reported lower earnings of $1.25 versus $1.87 in the prior year. For the next year, the market is expecting a contraction of 12.0% in earnings ($1.10 versus $1.25).

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