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 Dril-Quip ( DRQ) 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 Dril-Quip as such a stock due to the following factors:
- DRQ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $33.7 million.
- DRQ has traded 114,246 shares today.
- DRQ traded in a range 248.2% of the normal price range with a price range of $5.56.
- DRQ traded below its daily resistance level (quality: 48 days, meaning that the stock is crossing a resistance level set by the last 48 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. EXCLUSIVE OFFER: Get the inside scoop on opportunities in DRQ with the Ticky from Trade-Ideas. See the FREE profile for DRQ NOW at Trade-Ideas More details on DRQ: Dril-Quip, Inc. designs, manufactures, sells, and services engineered offshore drilling and production equipment for use in deepwater, harsh environment, and severe service applications worldwide. It operates in three segments: Western Hemisphere, Eastern Hemisphere, and Asia-Pacific. DRQ has a PE ratio of 33.5. Currently there are 4 analysts that rate Dril-Quip a buy, no analysts rate it a sell, and 4 rate it a hold. The average volume for Dril-Quip has been 302,400 shares per day over the past 30 days. Dril-Quip has a market cap of $4.8 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.21 and a short float of 1.4% with 1.84 days to cover. Shares are up 61.2% 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 Dril-Quip as a buy. 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, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 11.0%. Since the same quarter one year prior, revenues rose by 25.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- DRQ has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.82, which clearly demonstrates the ability to cover short-term cash needs.
- DRIL-QUIP INC has improved earnings per share by 41.9% in the most recent quarter compared to the same quarter a year ago. 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, DRIL-QUIP INC increased its bottom line by earning $2.94 versus $2.37 in the prior year. This year, the market expects an improvement in earnings ($4.05 versus $2.94).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Energy Equipment & Services industry average. The net income increased by 44.0% when compared to the same quarter one year prior, rising from $29.80 million to $42.93 million.
- 43.32% is the gross profit margin for DRIL-QUIP INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 19.33% is above that of the industry average.
- You can view the full Dril-Quip 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.