Trade-Ideas LLC identified

Thermo Fisher Scientific

(

TMO

) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Thermo Fisher Scientific as such a stock due to the following factors:

  • TMO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $330.1 million.
  • TMO has traded 1.3 million shares today.
  • TMO is trading at 5.18 times the normal volume for the stock at this time of day.
  • TMO crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on TMO:

TST Recommends

Thermo Fisher Scientific Inc. provides analytical instruments, equipment, reagents and consumables, software, and services for research, manufacturing, analysis, discovery, and diagnostics worldwide. The stock currently has a dividend yield of 0.5%. TMO has a PE ratio of 27. Currently there are 15 analysts that rate Thermo Fisher Scientific a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Thermo Fisher Scientific has been 1.8 million shares per day over the past 30 days. Thermo Fisher Scientific has a market cap of $53.5 billion and is part of the health care sector and health services industry. The stock has a beta of 1.00 and a short float of 1.3% with 2.64 days to cover. Shares are down 5.5% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Thermo Fisher Scientific as a

buy

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, reasonable valuation levels, good cash flow from operations and growth in earnings per share. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Life Sciences Tools & Services industry average. The net income increased by 0.9% when compared to the same quarter one year prior, going from $471.60 million to $476.10 million.
  • Net operating cash flow has increased to $743.90 million or 10.04% when compared to the same quarter last year. In addition, THERMO FISHER SCIENTIFIC INC has also modestly surpassed the industry average cash flow growth rate of 7.07%.
  • THERMO FISHER SCIENTIFIC INC's earnings per share improvement from the most recent quarter was slightly positive. 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, THERMO FISHER SCIENTIFIC INC increased its bottom line by earning $4.70 versus $3.49 in the prior year. This year, the market expects an improvement in earnings ($7.38 versus $4.70).

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