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 Cabela's ( CAB) 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 Cabela's as such a stock due to the following factors:
- CAB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $65.1 million.
- CAB has traded 760,975 shares today.
- CAB is trading at 1.53 times the normal volume for the stock at this time of day.
- CAB 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 CAB with the Ticky from Trade-Ideas. See the FREE profile for CAB NOW at Trade-Ideas More details on CAB: Cabela's Incorporated, together with its subsidiaries, operates as a specialty retailer and direct marketer of hunting, fishing, camping, and related outdoor merchandise. The company operates through three segments: Retail, Direct, and Financial Services. CAB has a PE ratio of 22.6. Currently there are 5 analysts that rate Cabela's a buy, no analysts rate it a sell, and 4 rate it a hold. The average volume for Cabela's has been 1.1 million shares per day over the past 30 days. Cabela's has a market cap of $4.8 billion and is part of the services sector and specialty retail industry. The stock has a beta of 1.94 and a short float of 23.1% with 10.94 days to cover. Shares are down 1% 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 Cabela's as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and good cash flow from operations. 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:
- The revenue growth came in higher than the industry average of 7.2%. Since the same quarter one year prior, revenues slightly increased by 4.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CABELAS INC has improved earnings per share by 17.9% 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, CABELAS INC increased its bottom line by earning $3.14 versus $2.42 in the prior year. This year, the market expects an improvement in earnings ($3.61 versus $3.14).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Specialty Retail industry average. The net income increased by 17.8% when compared to the same quarter one year prior, going from $68.03 million to $80.11 million.
- 42.08% is the gross profit margin for CABELAS INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 6.73% is above that of the industry average.
- Net operating cash flow has increased to $250.81 million or 41.66% when compared to the same quarter last year. In addition, CABELAS INC has also vastly surpassed the industry average cash flow growth rate of -18.94%.
- You can view the full Cabela's 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.