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

Williams Companies

(

WMB

) 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 Williams Companies as such a stock due to the following factors:

  • WMB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $205.3 million.
  • WMB has traded 52,655 shares today.
  • WMB is trading at 2.96 times the normal volume for the stock at this time of day.
  • WMB 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 WMB:

TheStreet Recommends

The Williams Companies, Inc. operates as an energy infrastructure company. The stock currently has a dividend yield of 4.2%. WMB has a PE ratio of 40.7. Currently there are 8 analysts that rate Williams Companies a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Williams Companies has been 5.8 million shares per day over the past 30 days. Williams Companies has a market cap of $24.5 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.39 and a short float of 2.7% with 3.31 days to cover. Shares are up 9% year to date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Williams Companies as a

buy

. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:

  • Net operating cash flow has increased to $539.00 million or 25.05% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 0.99%.
  • 39.93% is the gross profit margin for WILLIAMS COS INC which we consider to be strong. Regardless of WMB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WMB's net profit margin of 8.68% compares favorably to the industry average.
  • WMB, with its decline in revenue, slightly underperformed the industry average of 5.4%. Since the same quarter one year prior, revenues slightly dropped by 7.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has decreased by 9.0% when compared to the same quarter one year ago, dropping from $155.00 million to $141.00 million.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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