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 "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Western Refining as such a stock due to the following factors:
- WNR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $139.4 million.
- WNR has traded 843,676 shares today.
- WNR is trading at 1.52 times the normal volume for the stock at this time of day.
- WNR crossed below its 200-day simple moving average.
'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.
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More details on WNR:
Western Refining, Inc. operates as an independent crude oil refiner and marketer of refined products. Its Refining segment owns and operates two refineries, and related refined product distribution terminals and asphalt terminals, as well as operates a crude oil gathering pipeline system. The stock currently has a dividend yield of 2.7%. WNR has a PE ratio of 10.3. Currently there are 3 analysts that rate Western Refining a buy, no analysts rate it a sell, and 3 rate it a hold.
The average volume for Western Refining has been 1.9 million shares per day over the past 30 days. Western Refining has a market cap of $4.3 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.79 and a short float of 5.3% with 0.82 days to cover. Shares are up 1.1% year-to-date as of the close of trading on Tuesday.
rates Western Refining as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year, attractive valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins.
Highlights from the ratings report include:
- WNR's very impressive revenue growth greatly exceeded the industry average of 6.5%. Since the same quarter one year prior, revenues leaped by 65.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.91, 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 1.14, which illustrates the ability to avoid short-term cash problems.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 270.9% when compared to the same quarter one year prior, rising from $50.34 million to $186.75 million.
- You can view the full Western Refining Ratings Report.