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

Ultrapar Participacoes

(

UGP

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

  • UGP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $13.0 million.
  • UGP has traded 73,427 shares today.
  • UGP is down 3.3% today.
  • UGP was up 5.4% yesterday.

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More details on UGP:

Ultrapar Holdings Inc. is engaged in the fuel distribution and chemical businesses in Brazil. It operates in four segments: Gas Distribution, Fuel Distribution, Chemicals, and Storage. The stock currently has a dividend yield of 2.8%. UGP has a PE ratio of 22.4. Currently there are 2 analysts that rate Ultrapar Participacoes a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Ultrapar Participacoes has been 435,000 shares per day over the past 30 days. Ultrapar Participacoes has a market cap of $11.2 billion and is part of the basic materials sector and energy industry. Shares are down 10.7% year-to-date as of the close of trading on Friday.

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 Ultrapar Participacoes as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, reasonable valuation levels, good cash flow from operations and increase in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 3.2%. Since the same quarter one year prior, revenues rose by 22.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ULTRAPAR PARTICIPACOES SA has improved earnings per share by 19.0% 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, ULTRAPAR PARTICIPACOES SA increased its bottom line by earning $0.96 versus $0.91 in the prior year. This year, the market expects an improvement in earnings ($0.99 versus $0.96).
  • Net operating cash flow has remained constant at $282.65 million with no significant change when compared to the same quarter last year. In addition, ULTRAPAR PARTICIPACOES SA has modestly surpassed the industry average cash flow growth rate of -5.05%.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Oil, Gas & Consumable Fuels industry average. The net income increased by 17.7% when compared to the same quarter one year prior, going from $117.54 million to $138.35 million.

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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