PACCAR (PCAR) Shows Signs Of Being Water-Logged And Getting Wetter

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 PACCAR ( PCAR) 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 PACCAR as such a stock due to the following factors:

  • PCAR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $68.6 million.
  • PCAR has traded 1.2 million shares today.
  • PCAR traded in a range 203.1% of the normal price range with a price range of $1.80.
  • PCAR traded below its daily resistance level (quality: 17 days, meaning that the stock is crossing a resistance level set by the last 17 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 PCAR:

PACCAR Inc, together with its subsidiaries, designs, manufactures, and distributes light, medium, and heavy-duty trucks and related aftermarket parts worldwide. The stock currently has a dividend yield of 1.4%. PCAR has a PE ratio of 19.8. Currently there are 4 analysts that rate PACCAR a buy, 1 analyst rates it a sell, and 10 rate it a hold.

The average volume for PACCAR has been 1.3 million shares per day over the past 30 days. PACCAR has a market cap of $20.1 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 1.70 and a short float of 2.2% with 6.21 days to cover. Shares are up 25.6% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates PACCAR as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance and good cash flow from operations. 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:
  • Compared to its closing price of one year ago, PCAR's share price has jumped by 47.76%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, PCAR should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has significantly increased by 141.92% to $768.60 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 93.49%.
  • PACCAR INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, PACCAR INC increased its bottom line by earning $3.12 versus $2.86 in the prior year. This year, the market expects an improvement in earnings ($3.25 versus $3.12).
  • Despite the weak revenue results, PCAR has outperformed against the industry average of 18.8%. Since the same quarter one year prior, revenues slightly dropped by 3.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The change in net income 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 has decreased by 1.9% when compared to the same quarter one year ago, dropping from $297.20 million to $291.60 million.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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