GameStop (GME) Roof Leaking 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 GameStop ( GME) 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 GameStop as such a stock due to the following factors:

  • GME has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $168.9 million.
  • GME has traded 7.1 million shares today.
  • GME is trading at 3.59 times the normal volume for the stock at this time of day.
  • GME 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 GME with the Ticky from Trade-Ideas. See the FREE profile for GME NOW at Trade-Ideas

More details on GME:

GameStop Corp. operates as a video game retailer. The stock currently has a dividend yield of 2.3%. GME has a PE ratio of 15.4. Currently there are 12 analysts that rate GameStop a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for GameStop has been 2.9 million shares per day over the past 30 days. GameStop has a market cap of $5.6 billion and is part of the services sector and retail industry. The stock has a beta of 0.63 and a short float of 20.6% with 5.29 days to cover. Shares are down 10.4% 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 GameStop as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, reasonable valuation levels, good cash flow from operations and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 8.2%. Since the same quarter one year prior, revenues rose by 18.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 111.41% and other important driving factors, this stock has surged by 93.49% 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, GME 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 significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 111.0% when compared to the same quarter one year prior, rising from -$624.30 million to $68.60 million.
  • Net operating cash flow has significantly increased by 80.29% to $680.60 million when compared to the same quarter last year. In addition, GAMESTOP CORP has also vastly surpassed the industry average cash flow growth rate of 4.43%.

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

If you liked this article you might like

Lockheed Martin, Raytheon, Activision Blizzard: 'Mad Money' Lightning Round

Shrug Off The Apple-FANG Bite: Cramer's 'Mad Money' Recap (Thur 9/14/17)

As Target and Walmart Move Away From AWS, How Much Pain Will Amazon Feel?

GameStop CEO Buys More J.C. Penney Shares After Massive Plunge