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
) 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 Xylem as such a stock due to the following factors:
- XYL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $35.9 million.
- XYL has traded 1.4 million shares today.
- XYL traded in a range 201.1% of the normal price range with a price range of $1.58.
- XYL traded below its daily resistance level (quality: 22 days, meaning that the stock is crossing a resistance level set by the last 22 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 XYL:
Xylem Inc. is engaged in the design, manufacture, and application of engineered technologies for the water and wastewater applications. The company operates in two segments, Water Infrastructure and Applied Water. The stock currently has a dividend yield of 1.3%. XYL has a PE ratio of 30.4. Currently there are 8 analysts that rate Xylem a buy, no analysts rate it a sell, and 7 rate it a hold.
The average volume for Xylem has been 1.1 million shares per day over the past 30 days. Xylem has a market cap of $7.1 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.24 and a short float of 1.1% with 2.00 days to cover. Shares are up 10.3% year-to-date as of the close of trading on Wednesday.
rates Xylem as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in net income, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- XYL's revenue growth has slightly outpaced the industry average of 6.4%. Since the same quarter one year prior, revenues slightly increased by 3.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The current debt-to-equity ratio, 0.56, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.48, which illustrates the ability to avoid short-term cash problems.
- The net income growth from the same quarter one year ago has significantly exceeded that of the Machinery industry average, but is less than that of the S&P 500. The net income increased by 19.5% when compared to the same quarter one year prior, going from $41.00 million to $49.00 million.
- Net operating cash flow has increased to $22.00 million or 10.00% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -4.30%.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 33.11% over the past year, a rise that has exceeded that of the S&P 500 Index. 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.
- You can view the full Xylem Ratings Report.