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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.

Trade-Ideas LLC identified

Celanese

(

CE

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

  • CE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $101.4 million.
  • CE has traded 152,416 shares today.
  • CE traded in a range 206% of the normal price range with a price range of $3.56.
  • CE traded below its daily resistance level (quality: 59 days, meaning that the stock is crossing a resistance level set by the last 59 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 CE:

TheStreet Recommends

Celanese Corporation, a technology and specialty materials company, manufactures and sells value-added chemicals, thermoplastic polymers, and other chemical-based products worldwide. The stock currently has a dividend yield of 1.7%. CE has a PE ratio of 16. Currently there are 5 analysts that rate Celanese a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Celanese has been 1.0 million shares per day over the past 30 days. Celanese has a market cap of $10.6 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 1.20 and a short float of 4.2% with 2.92 days to cover. Shares are up 15.4% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Celanese as a

buy

. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, good cash flow from operations and increase in stock price during the past year. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 20.4% when compared to the same quarter one year prior, going from $196.00 million to $236.00 million.
  • The debt-to-equity ratio is somewhat low, currently at 0.93, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, CE has a quick ratio of 1.58, which demonstrates the ability of the company to cover short-term liquidity needs.
  • After a year of stock price fluctuations, the net result is that CE's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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.
  • CELANESE CORP has improved earnings per share by 22.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CELANESE CORP reported lower earnings of $4.03 versus $6.94 in the prior year. This year, the market expects an improvement in earnings ($5.75 versus $4.03).

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