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 International Paper ( IP) 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 International Paper as such a stock due to the following factors:
- IP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $181.3 million.
- IP has traded 7.1 million shares today.
- IP is trading at 25.64 times the normal volume for the stock at this time of day.
- IP 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. EXCLUSIVE OFFER: Get the inside scoop on opportunities in IP with the Ticky from Trade-Ideas. See the FREE profile for IP NOW at Trade-Ideas More details on IP: International Paper Company operates as a paper and packaging company in North America, Europe, Latin America, Russia, Asia, and North Africa. The stock currently has a dividend yield of 3%. IP has a PE ratio of 21.4. Currently there are 12 analysts that rate International Paper a buy, no analysts rate it a sell, and 1 rates it a hold. The average volume for International Paper has been 3.1 million shares per day over the past 30 days. International has a market cap of $21.0 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.41 and a short float of 2.1% with 2.09 days to cover. Shares are up 18.1% year to date as of the close of trading on Thursday. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more. TheStreetRatings.com Analysis: TheStreet Quant Ratings rates International Paper as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, revenue growth, growth in earnings per share and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated. Highlights from the ratings report include:
- Powered by its strong earnings growth of 92.59% and other important driving factors, this stock has surged by 40.11% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, IP should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- 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 Paper & Forest Products industry average. The net income increased by 93.3% when compared to the same quarter one year prior, rising from $134.00 million to $259.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.7%. Since the same quarter one year prior, revenues slightly increased by 3.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- INTL PAPER CO reported significant earnings per share improvement 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, INTL PAPER CO reported lower earnings of $1.71 versus $2.94 in the prior year. This year, the market expects an improvement in earnings ($3.36 versus $1.71).
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Paper & Forest Products industry and the overall market, INTL PAPER CO's return on equity exceeds that of both the industry average and the S&P 500.
- You can view the full International Paper Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.