J.M. Smucker (SJM) Is Today's Water-Logged And Getting Wetter Stock

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 J.M. Smucker ( SJM) 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 J.M. Smucker as such a stock due to the following factors:

  • SJM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $91.4 million.
  • SJM has traded 697,463 shares today.
  • SJM traded in a range 261.8% of the normal price range with a price range of $4.14.
  • SJM traded below its daily resistance level (quality: 407 days, meaning that the stock is crossing a resistance level set by the last 407 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 SJM:

The J. M. Smucker Company engages in manufacturing and marketing branded food products worldwide. The company operates through three segments: U.S. Retail Coffee; U.S. Retail Consumer Foods; and International, Foodservice, and Natural Foods. The stock currently has a dividend yield of 2.5%. SJM has a PE ratio of 17.7. Currently there are 5 analysts that rate J.M. Smucker a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for J.M. Smucker has been 838,100 shares per day over the past 30 days. J.M. Smucker has a market cap of $9.9 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.61 and a short float of 1.8% with 1.80 days to cover. Shares are down 8.2% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates J.M. Smucker as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, reasonable valuation levels, expanding profit margins, increase in net income and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • SMUCKER (JM) CO has improved earnings per share by 7.3% 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 two years. We feel that this trend should continue. During the past fiscal year, SMUCKER (JM) CO increased its bottom line by earning $5.00 versus $4.06 in the prior year. This year, the market expects an improvement in earnings ($5.77 versus $5.00).
  • 38.03% is the gross profit margin for SMUCKER (JM) CO which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.83% trails the industry average.
  • The net income growth from the same quarter one year ago has exceeded that of the Food Products industry average, but is less than that of the S&P 500. The net income increased by 3.0% when compared to the same quarter one year prior, going from $148.85 million to $153.40 million.
  • The current debt-to-equity ratio, 0.43, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that SJM's debt-to-equity ratio is low, the quick ratio, which is currently 0.69, displays a potential problem in covering short-term cash needs.

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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