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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

Sealed Air

(

SEE

) 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 Sealed Air as such a stock due to the following factors:

  • SEE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $63.3 million.
  • SEE has traded 643,037 shares today.
  • SEE is trading at 2.40 times the normal volume for the stock at this time of day.
  • SEE 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 SEE:

TheStreet Recommends

Sealed Air Corporation, through its subsidiaries, provides food safety and security, facility hygiene, and product protection solutions worldwide. The company operates through three segments: Food Care, Diversey Care, and Product Care. The stock currently has a dividend yield of 1.6%. SEE has a PE ratio of 41.1. Currently there are 4 analysts that rate Sealed Air a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Sealed Air has been 1.5 million shares per day over the past 30 days. Sealed Air has a market cap of $6.8 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.41 and a short float of 2.3% with 2.52 days to cover. Shares are down 4% year-to-date as of the close of trading on Wednesday.

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 Sealed Air as a

buy

. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, expanding profit margins, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:

  • SEALED AIR CORP has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, SEALED AIR CORP turned its bottom line around by earning $0.42 versus -$8.39 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $0.42).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Containers & Packaging industry. The net income increased by 2559.3% when compared to the same quarter one year prior, rising from $2.70 million to $71.80 million.
  • 37.16% is the gross profit margin for SEALED AIR CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 3.92% trails the industry average.
  • This stock has managed to rise its share value by 21.36% over the past twelve months. 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.
  • SEE, with its decline in revenue, slightly underperformed the industry average of 6.3%. Since the same quarter one year prior, revenues slightly dropped by 0.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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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