Trade-Ideas LLC identified

Pinnacle Foods

(

PF

) 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 Pinnacle Foods as such a stock due to the following factors:

  • PF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $33.9 million.
  • PF has traded 471,243 shares today.
  • PF traded in a range 235.5% of the normal price range with a price range of $1.70.
  • PF traded below its daily resistance level (quality: 8 days, meaning that the stock is crossing a resistance level set by the last 8 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 PF:

TheStreet Recommends

Pinnacle Foods Inc., through its subsidiaries, manufactures, markets, and distributes branded convenience food products in North America. It operates through three segments: Birds Eye Frozen, Duncan Hines Grocery, and Specialty Foods. The stock currently has a dividend yield of 2.3%. PF has a PE ratio of 2. Currently there are 3 analysts that rate Pinnacle Foods a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Pinnacle Foods has been 854,800 shares per day over the past 30 days. Pinnacle has a market cap of $5.1 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.10 and a short float of 1% with 1.44 days to cover. Shares are up 26.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Pinnacle Foods as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, compelling growth in net income, notable return on equity and impressive record of earnings per share growth. 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 8.2%. Since the same quarter one year prior, revenues slightly increased by 2.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 32.05% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, PF should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food Products industry. The net income increased by 22.7% when compared to the same quarter one year prior, going from $35.58 million to $43.68 million.
  • 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 on the basis of return on equity, PINNACLE FOODS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • PINNACLE FOODS INC has improved earnings per share by 23.3% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, PINNACLE FOODS INC increased its bottom line by earning $2.12 versus $0.77 in the prior year. For the next year, the market is expecting a contraction of 10.4% in earnings ($1.90 versus $2.12).

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