Trade-Ideas LLC identified

Staples

(

SPLS

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

  • SPLS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $71.3 million.
  • SPLS has traded 2.7 million shares today.
  • SPLS traded in a range 203.8% of the normal price range with a price range of $0.47.
  • SPLS traded below its daily resistance level (quality: 37 days, meaning that the stock is crossing a resistance level set by the last 37 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 SPLS:

Staples, Inc., together with its subsidiaries, operates office products superstores. It operates in three segments: North American Stores & Online, North American Commercial, and International Operations. The stock currently has a dividend yield of 5.4%. SPLS has a PE ratio of 16. Currently there is 1 analyst that rates Staples a buy, no analysts rate it a sell, and 9 rate it a hold.

The average volume for Staples has been 10.1 million shares per day over the past 30 days. Staples has a market cap of $5.8 billion and is part of the services sector and specialty retail industry. The stock has a beta of 1.47 and a short float of 5.2% with 3.05 days to cover. Shares are down 8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Staples as a

hold

. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:

  • The debt-to-equity ratio is somewhat low, currently at 0.64, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.84 is somewhat weak and could be cause for future problems.
  • The gross profit margin for STAPLES INC is currently lower than what is desirable, coming in at 27.17%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.80% trails that of the industry average.
  • Net operating cash flow has declined marginally to $276.00 million or 8.00% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, STAPLES INC has marginally lower results.

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