Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.
Trade-Ideas LLC identified
) 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 Raytheon as such a stock due to the following factors:
- RTN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $133.2 million.
- RTN has traded 1.2 million shares today.
- RTN is trading at 4.45 times the normal volume for the stock at this time of day.
- RTN 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 RTN:
Raytheon Company develops integrated products, services, and solutions in the areas of sensing; effects; command, control, communications, and intelligence; mission support; and cyber and information security worldwide. The stock currently has a dividend yield of 2.3%. RTN has a PE ratio of 15.9. Currently there are 8 analysts that rate Raytheon a buy, no analysts rate it a sell, and 5 rate it a hold.
The average volume for Raytheon has been 1.6 million shares per day over the past 30 days. Raytheon has a market cap of $32.3 billion and is part of the industrial goods sector and aerospace/defense industry. The stock has a beta of 0.53 and a short float of 1.7% with 3.86 days to cover. Shares are down 3.3% year-to-date as of the close of trading on Wednesday.
rates Raytheon as a
. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
Highlights from the ratings report include:
- 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. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- RAYTHEON CO has improved earnings per share by 9.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, RAYTHEON CO increased its bottom line by earning $5.96 versus $5.66 in the prior year. This year, the market expects an improvement in earnings ($6.90 versus $5.96).
- The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels.
- The net income growth from the same quarter one year ago has exceeded that of the Aerospace & Defense industry average, but is less than that of the S&P 500. The net income increased by 5.3% when compared to the same quarter one year prior, going from $489.00 million to $515.00 million.
- You can view the full Raytheon Ratings Report.