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

AEP Industries

(

AEPI

) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified AEP Industries as such a stock due to the following factors:

  • AEPI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $19.1 million.
  • AEPI has traded 195,722 shares today.
  • AEPI is down 3.4% today.
  • AEPI was up 17.1% yesterday.

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More details on AEPI:

Processor Type: Film & Sheet Plastic Sales (2001): $417.2m Founded in: Area Code: 1 Materials Used: PE, PP, PVC Plant Locations: Griffin, GA; Wrightownship, PA; West Hill, Ontario; Matthews, NC; Gainesville, TX; Edmonton, Alberta; Chino, CA; Alsip, IL; Waxahachie, TX End Markets: AEPI has a PE ratio of 17.0. Currently there are no analysts that rate AEP Industries a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for AEP Industries has been 62,000 shares per day over the past 30 days. AEP has a market cap of $427.9 million and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.46 and a short float of 8.1% with 1.25 days to cover. Shares are up 29.1% year to date as of the close of trading on Monday.

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 AEP Industries as a

buy

. The company's strengths can be seen in multiple areas, such as its solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Compared to its closing price of one year ago, AEPI's share price has jumped by 51.69%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, AEPI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • AEPI, with its decline in revenue, slightly underperformed the industry average of 5.4%. Since the same quarter one year prior, revenues slightly dropped by 4.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Containers & Packaging industry and the overall market, AEP INDUSTRIES INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • AEP INDUSTRIES INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, AEP INDUSTRIES INC increased its bottom line by earning $4.14 versus $2.10 in the prior year. For the next year, the market is expecting a contraction of 53.9% in earnings ($1.91 versus $4.14).
  • The debt-to-equity ratio is very high at 2.91 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, AEPI's quick ratio is somewhat strong at 1.03, demonstrating the ability to handle short-term liquidity needs.

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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