Trade-Ideas LLC identified

W W Grainger

(

GWW

) 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 W W Grainger as such a stock due to the following factors:

  • GWW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $186.1 million.
  • GWW has traded 645,329 shares today.
  • GWW traded in a range 232.1% of the normal price range with a price range of $14.27.
  • GWW traded below its daily resistance level (quality: 4 days, meaning that the stock is crossing a resistance level set by the last 4 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 GWW:

TST Recommends

W.W. Grainger, Inc. operates as a distributor of maintenance, repair, and operating (MRO) supplies; and other related products and services that are used by businesses and institutions primarily in the United States and Canada. The stock currently has a dividend yield of 2.5%. GWW has a PE ratio of 16. Currently there are 3 analysts that rate W W Grainger a buy, 4 analysts rate it a sell, and 9 rate it a hold.

The average volume for W W Grainger has been 760,900 shares per day over the past 30 days. W W Grainger has a market cap of $11.8 billion and is part of the services sector and wholesale industry. The stock has a beta of 0.71 and a short float of 17.2% with 10.31 days to cover. Shares are down 8.4% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates W W Grainger as a

buy

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, good cash flow from operations, expanding profit margins and reasonable valuation levels. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • The debt-to-equity ratio is somewhat low, currently at 0.77, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.00, which illustrates the ability to avoid short-term cash problems.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Trading Companies & Distributors industry and the overall market, GRAINGER (W W) INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • Net operating cash flow has slightly increased to $366.43 million or 9.58% when compared to the same quarter last year. In addition, GRAINGER (W W) INC has also modestly surpassed the industry average cash flow growth rate of 1.22%.
  • GRAINGER (W W) INC's earnings per share declined by 11.5% in the most recent quarter compared to 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, GRAINGER (W W) INC increased its bottom line by earning $11.45 versus $11.12 in the prior year. This year, the market expects an improvement in earnings ($11.65 versus $11.45).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 2.2%. Since the same quarter one year prior, revenues slightly dropped by 1.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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