Trade-Ideas LLC identified

CalAtlantic Group

(

CAA

) 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 CalAtlantic Group as such a stock due to the following factors:

  • CAA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $34.9 million.
  • CAA has traded 485,360 shares today.
  • CAA traded in a range 211.7% of the normal price range with a price range of $1.50.
  • CAA traded below its daily resistance level (quality: 6 days, meaning that the stock is crossing a resistance level set by the last 6 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 CAA:

TheStreet Recommends

CalAtlantic Group, Inc. builds single-family attached and detached homes in the United States. The company operates through four segments: North, Southeast, Southwest, and West. The stock currently has a dividend yield of 0.5%. CAA has a PE ratio of 11. Currently there are 4 analysts that rate CalAtlantic Group a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for CalAtlantic Group has been 1.5 million shares per day over the past 30 days. CalAtlantic Group has a market cap of $4.0 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.40 and a short float of 41.3% with 11.92 days to cover. Shares are down 10.7% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates CalAtlantic Group as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • CAA's very impressive revenue growth greatly exceeded the industry average of 2.4%. Since the same quarter one year prior, revenues leaped by 123.2%. 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.
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Household Durables industry average. The net income increased by 19.9% when compared to the same quarter one year prior, going from $64.64 million to $77.53 million.
  • CAA's debt-to-equity ratio of 0.98 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Household Durables industry and the overall market, CALATLANTIC GROUP INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The gross profit margin for CALATLANTIC GROUP INC is rather low; currently it is at 24.95%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.56% trails that of the industry average.

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