Trade-Ideas LLC identified

Treehouse Foods

(

THS

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

  • THS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $56.0 million.
  • THS has traded 281,322 shares today.
  • THS traded in a range 226% of the normal price range with a price range of $3.74.
  • THS traded below its daily resistance level (quality: 36 days, meaning that the stock is crossing a resistance level set by the last 36 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 THS:

TreeHouse Foods, Inc. operates as a food and beverage manufacturer in the United States and Canada. The company operates through North American Retail Grocery, Food Away From Home, and Industrial and Export segments. THS has a PE ratio of 47. Currently there are 11 analysts that rate Treehouse Foods a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Treehouse Foods has been 756,900 shares per day over the past 30 days. Treehouse has a market cap of $5.8 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.55 and a short float of 7.1% with 6.91 days to cover. Shares are up 31.5% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Treehouse Foods as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • THS's very impressive revenue growth greatly exceeded the industry average of 13.7%. Since the same quarter one year prior, revenues leaped by 62.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $110.72 million or 35.68% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -7.73%.
  • Compared to its closing price of one year ago, THS's share price has jumped by 27.26%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • TREEHOUSE FOODS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, TREEHOUSE FOODS INC increased its bottom line by earning $2.63 versus $2.20 in the prior year. This year, the market expects an improvement in earnings ($3.07 versus $2.63).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Food Products industry. The net income has significantly decreased by 118.7% when compared to the same quarter one year ago, falling from $17.85 million to -$3.35 million.

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