Garmin (GRMN) Is Water-Logged And Getting Wetter Today

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 Garmin ( GRMN) 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 Garmin as such a stock due to the following factors:

  • GRMN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $42.4 million.
  • GRMN has traded 834,540 shares today.
  • GRMN traded in a range 247.1% of the normal price range with a price range of $2.35.
  • GRMN traded below its daily resistance level (quality: 84 days, meaning that the stock is crossing a resistance level set by the last 84 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 GRMN:

Garmin Ltd. is a worldwide provider of navigation, communications and information devices, most of which are enabled by global positioning system (GPS) technology. The stock currently has a dividend yield of 3.9%. GRMN has a PE ratio of 15.8. Currently there are 3 analysts that rate Garmin a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Garmin has been 1.2 million shares per day over the past 30 days. Garmin has a market cap of $9.1 billion and is part of the technology sector and electronics industry. The stock has a beta of 0.65 and a short float of 12.4% with 15.82 days to cover. Shares are up 14.1% year-to-date as of the close of trading on Tuesday.

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 Garmin as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations, increase in stock price during the past year and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • GRMN 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. To add to this, GRMN has a quick ratio of 1.72, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for GARMIN LTD is rather high; currently it is at 56.61%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 29.15% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $216.61 million or 31.35% when compared to the same quarter last year. Despite an increase in cash flow of 31.35%, GARMIN LTD is still growing at a significantly lower rate than the industry average of 85.90%.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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.
  • GARMIN LTD has improved earnings per share by 33.3% 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 year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, GARMIN LTD increased its bottom line by earning $2.77 versus $2.67 in the prior year. For the next year, the market is expecting a contraction of 11.0% in earnings ($2.47 versus $2.77).

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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