Trade-Ideas LLC identified

Charles River Laboratories International In

(

CRL

) 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 Charles River Laboratories International In as such a stock due to the following factors:

  • CRL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $60.0 million.
  • CRL has traded 97,477 shares today.
  • CRL is trading at 1.66 times the normal volume for the stock at this time of day.
  • CRL 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 CRL:

Charles River Laboratories International, Inc., an early-stage contract research company, provides drug discovery and preclinical development services worldwide. CRL has a PE ratio of 25. Currently there are 7 analysts that rate Charles River Laboratories International In a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Charles River Laboratories International In has been 519,200 shares per day over the past 30 days. Charles River Laboratories International In has a market cap of $3.6 billion and is part of the health care sector and health services industry. The stock has a beta of 0.88 and a short float of 2.1% with 1.86 days to cover. Shares are down 4.2% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Charles River Laboratories International In as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and reasonable valuation levels. We feel its 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:

  • The revenue growth came in higher than the industry average of 5.1%. Since the same quarter one year prior, revenues slightly increased by 6.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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.
  • CHARLES RIVER LABS INTL INC has improved earnings per share by 16.2% 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, CHARLES RIVER LABS INTL INC increased its bottom line by earning $2.69 versus $2.15 in the prior year. This year, the market expects an improvement in earnings ($3.71 versus $2.69).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Life Sciences Tools & Services industry average. The net income increased by 16.7% when compared to the same quarter one year prior, going from $32.04 million to $37.38 million.

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