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 Vale ( VALE) 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 Vale as such a stock due to the following factors:
- VALE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $340.2 million.
- VALE has traded 1.1 million shares today.
- VALE traded in a range 323.4% of the normal price range with a price range of $1.51.
- VALE traded below its daily resistance level (quality: 217 days, meaning that the stock is crossing a resistance level set by the last 217 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 VALE with the Ticky from Trade-Ideas. See the FREE profile for VALE NOW at Trade-Ideas More details on VALE: Vale S.A. engages in the research, production, and marketing of iron ore and pellets, nickel, fertilizers, copper, coal, manganese, ferroalloys, cobalt, platinum group metals, and precious metals in Brazil and internationally. The stock currently has a dividend yield of 0.9%. VALE has a PE ratio of 13.4. Currently there are 6 analysts that rate Vale a buy, 1 analyst rates it a sell, and 5 rate it a hold. The average volume for Vale has been 18.3 million shares per day over the past 30 days. Vale has a market cap of $74.1 billion and is part of the basic materials sector and metals & mining industry. Shares are down 8.8% 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 Vale as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and weak operating cash flow. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 1.9%. Since the same quarter one year prior, revenues rose by 13.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The gross profit margin for VALE SA is rather high; currently it is at 60.01%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 29.72% significantly outperformed against the industry average.
- VALE SA reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. 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, VALE SA reported lower earnings of $0.94 versus $3.87 in the prior year. This year, the market expects an improvement in earnings ($2.23 versus $0.94).
- Net operating cash flow has decreased to $4,632.98 million or 21.96% when compared to the same quarter last year. Despite a decrease in cash flow VALE SA is still fairing well by exceeding its industry average cash flow growth rate of -37.34%.
- VALE's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 28.29%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- You can view the full Vale 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.