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 PepsiCo ( PEP) 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 PepsiCo as such a stock due to the following factors:
- PEP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $420.7 million.
- PEP has traded 4.0 million shares today.
- PEP traded in a range 202.3% of the normal price range with a price range of $2.44.
- PEP traded below its daily resistance level (quality: 8 days, meaning that the stock is crossing a resistance level set by the last 8 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 PEP with the Ticky from Trade-Ideas. See the FREE profile for PEP NOW at Trade-Ideas More details on PEP: PepsiCo, Inc. operates as a food and beverage company worldwide. The stock currently has a dividend yield of 2.8%. PEP has a PE ratio of 19.1. Currently there are 9 analysts that rate PepsiCo a buy, no analysts rate it a sell, and 5 rate it a hold. The average volume for PepsiCo has been 4.7 million shares per day over the past 30 days. PepsiCo has a market cap of $124.6 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.33 and a short float of 0.6% with 1.74 days to cover. Shares are down 1.8% year-to-date as of the close of trading on Wednesday. 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 PepsiCo as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, growth in earnings per share and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 2.4%. Since the same quarter one year prior, revenues slightly increased by 1.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Beverages industry and the overall market, PEPSICO INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for PEPSICO INC is rather high; currently it is at 56.59%. Regardless of PEP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.31% trails the industry average.
- PEPSICO INC's earnings per share improvement from the most recent quarter was slightly positive. 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, PEPSICO INC reported lower earnings of $3.92 versus $4.02 in the prior year. This year, the market expects an improvement in earnings ($4.33 versus $3.92).
- You can view the full PepsiCo 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.