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 EMC Corporation ( EMC) 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 EMC Corporation as such a stock due to the following factors:
- EMC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $653.0 million.
- EMC has traded 2.4 million shares today.
- EMC is trading at 28.24 times the normal volume for the stock at this time of day.
- EMC 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 EMC with the Ticky from Trade-Ideas. See the FREE profile for EMC NOW at Trade-Ideas More details on EMC: EMC Corporation, together with its subsidiaries, develops, delivers, and supports information infrastructure and virtual infrastructure technologies, solutions, and services. The stock currently has a dividend yield of 1.6%. EMC has a PE ratio of 20.4. Currently there are 21 analysts that rate EMC Corporation a buy, no analysts rate it a sell, and 4 rate it a hold. The average volume for EMC Corporation has been 21.7 million shares per day over the past 30 days. EMC has a market cap of $52.5 billion and is part of the technology sector and computer hardware industry. The stock has a beta of 1.64 and a short float of 5.6% with 4.44 days to cover. Shares are up 0.8% year-to-date as of the close of trading on Monday. 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 EMC Corporation as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity. Highlights from the ratings report include:
- EMC's revenue growth has slightly outpaced the industry average of 2.6%. Since the same quarter one year prior, revenues slightly increased by 4.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $1,792.00 million or 24.62% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 6.57%.
- EMC CORP/MA' 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, EMC CORP/MA increased its bottom line by earning $1.23 versus $1.10 in the prior year. This year, the market expects an improvement in earnings ($1.80 versus $1.23).
- The gross profit margin for EMC CORP/MA is rather high; currently it is at 69.58%. EMC has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, the net profit margin of 10.57% trails the industry average.
- Despite currently having a low debt-to-equity ratio of 0.32, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.26 is sturdy.
- You can view the full EMC Corporation 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.