Trade-Ideas LLC identified

Waters

(

WAT

) 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 Waters as such a stock due to the following factors:

  • WAT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $69.4 million.
  • WAT has traded 221,132 shares today.
  • WAT traded in a range 254.5% of the normal price range with a price range of $6.09.
  • WAT traded below its daily resistance level (quality: 13 days, meaning that the stock is crossing a resistance level set by the last 13 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 WAT:

Waters Corporation operates as an analytical instrument manufacturer in the United States and internationally. WAT has a PE ratio of 24. Currently there are 3 analysts that rate Waters a buy, 1 analyst rates it a sell, and 10 rate it a hold.

The average volume for Waters has been 559,900 shares per day over the past 30 days. Waters has a market cap of $11.2 billion and is part of the health care sector and health services industry. The stock has a beta of 0.70 and a short float of 4.2% with 5.41 days to cover. Shares are up 2.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Waters as a

buy

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share and expanding profit margins. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 3.9%. Since the same quarter one year prior, revenues slightly increased by 0.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.81, 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 this, the company maintains a quick ratio of 5.08, which clearly demonstrates the ability to cover short-term cash needs.
  • WATERS CORP's earnings per share improvement from the most recent quarter was slightly positive. 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, WATERS CORP increased its bottom line by earning $5.65 versus $5.09 in the prior year. This year, the market expects an improvement in earnings ($6.30 versus $5.65).
  • The gross profit margin for WATERS CORP is rather high; currently it is at 62.94%. Regardless of WAT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WAT's net profit margin of 25.75% significantly outperformed against the industry.

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