Trade-Ideas LLC identified

Cal-Maine Foods

(

CALM

) 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 Cal-Maine Foods as such a stock due to the following factors:

  • CALM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $36.0 million.
  • CALM has traded 572,052 shares today.
  • CALM traded in a range 270.8% of the normal price range with a price range of $4.31.
  • CALM traded below its daily resistance level (quality: 25 days, meaning that the stock is crossing a resistance level set by the last 25 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 CALM:

Cal-Maine Foods, Inc. produces, grades, packages, markets, and distributes shell eggs. It offers specialty shell eggs, such as nutritionally enhanced, cage free, organic, and brown eggs under the Egg-Land's Best, Land O' Lake, Farmhouse, and 4-Grain brand names, as well as under private labels. The stock currently has a dividend yield of 2.2%. CALM has a PE ratio of 17. Currently there are 2 analysts that rate Cal-Maine Foods a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Cal-Maine Foods has been 695,700 shares per day over the past 30 days. Cal-Maine has a market cap of $2.5 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 1.56 and a short float of 31% with 14.41 days to cover. Shares are up 47.7% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Cal-Maine Foods as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 9.0%. Since the same quarter one year prior, revenues slightly increased by 8.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • CALM's debt-to-equity ratio is very low at 0.07 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 2.73, which clearly demonstrates the ability to cover short-term cash needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Food Products industry and the overall market, CAL-MAINE FOODS INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Powered by its strong earnings growth of 46.15% and other important driving factors, this stock has surged by 27.94% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CALM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • CAL-MAINE FOODS INC has improved earnings per share by 46.1% 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, CAL-MAINE FOODS INC increased its bottom line by earning $3.33 versus $2.26 in the prior year. This year, the market expects an improvement in earnings ($11.69 versus $3.33).

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