Celanese Corporation (CE) Showing 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 Celanese Corporation ( CE) 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 Celanese Corporation as such a stock due to the following factors:

  • CE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $39.4 million.
  • CE has traded 284,461 shares today.
  • CE traded in a range 223.5% of the normal price range with a price range of $2.29.
  • CE traded below its daily resistance level (quality: 6 days, meaning that the stock is crossing a resistance level set by the last 6 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 CE:

Celanese Corporation engages in manufacture and sale of value-added chemicals, thermoplastic polymers, and other chemical-based products. The company operates in four segments: Advanced Engineered Materials, Consumer Specialties, Industrial Specialties, and Acetyl Intermediates. The stock currently has a dividend yield of 1.3%. CE has a PE ratio of 17.8. Currently there are 7 analysts that rate Celanese Corporation a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Celanese Corporation has been 953,700 shares per day over the past 30 days. Celanese has a market cap of $9.0 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 1.96 and a short float of 1.9% with 3.36 days to cover. Shares are up 27.6% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Celanese Corporation as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, revenue growth and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 33.75% and other important driving factors, this stock has surged by 31.83% 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, CE should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • CELANESE CORP has improved earnings per share by 33.8% 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, CELANESE CORP increased its bottom line by earning $3.99 versus $3.82 in the prior year. This year, the market expects an improvement in earnings ($4.50 versus $3.99).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Chemicals industry average. The net income increased by 35.4% when compared to the same quarter one year prior, rising from $127.00 million to $172.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.4%. Since the same quarter one year prior, revenues slightly increased by 1.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Chemicals industry and the overall market, CELANESE CORP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.

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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