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Trade-Ideas LLC identified

Shell Midstream Partners

(

SHLX

) 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 Shell Midstream Partners as such a stock due to the following factors:

  • SHLX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $40.1 million.
  • SHLX has traded 522,974 shares today.
  • SHLX traded in a range 215.1% of the normal price range with a price range of $1.60.
  • SHLX traded below its daily resistance level (quality: 3 days, meaning that the stock is crossing a resistance level set by the last 3 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 SHLX:

TheStreet Recommends

Shell Midstream Partners, L.P. owns, operates, develops, and acquires pipelines and other midstream assets in the United States. The company owns interests in four crude oil pipeline systems and two refined products pipeline systems, as well as a crude tank storage and terminal system. The stock currently has a dividend yield of 2.6%. SHLX has a PE ratio of 25. Currently there are 2 analysts that rate Shell Midstream Partners a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Shell Midstream Partners has been 816,400 shares per day over the past 30 days. Shell Midstream has a market cap of $5.4 billion and is part of the basic materials sector and energy industry. Shares are down 20.2% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Shell Midstream Partners as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 24.6%. Since the same quarter one year prior, revenues rose by 16.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SHLX's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 7.03, which clearly demonstrates the ability to cover short-term cash needs.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 134.3% when compared to the same quarter one year prior, rising from $23.60 million to $55.30 million.
  • SHLX's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 28.19%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

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