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 Hershey ( HSY) 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 Hershey as such a stock due to the following factors:
- HSY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $112.7 million.
- HSY has traded 280,058 shares today.
- HSY traded in a range 285.9% of the normal price range with a price range of $3.51.
- HSY traded below its daily resistance level (quality: 106 days, meaning that the stock is crossing a resistance level set by the last 106 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 HSY with the Ticky from Trade-Ideas. See the FREE profile for HSY NOW at Trade-Ideas More details on HSY: The Hershey Company, together with its subsidiaries, manufactures, markets, distributes, and sells chocolate and sugar confectionery products, pantry items, and gum and mint refreshment products. The stock currently has a dividend yield of 1.8%. HSY has a PE ratio of 29.4. Currently there are 5 analysts that rate Hershey a buy, 1 analyst rates it a sell, and 5 rate it a hold. The average volume for Hershey has been 1.2 million shares per day over the past 30 days. Hershey has a market cap of $16.2 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.16 and a short float of 2.4% with 3.02 days to cover. Shares are up 3% 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 Hershey 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, expanding profit margins, good cash flow from operations and increase in stock price during the past year. 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:
- HSY's revenue growth has slightly outpaced the industry average of 2.0%. Since the same quarter one year prior, revenues rose by 11.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- HERSHEY CO has improved earnings per share by 24.2% 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, HERSHEY CO increased its bottom line by earning $3.61 versus $2.89 in the prior year. This year, the market expects an improvement in earnings ($4.12 versus $3.61).
- 46.49% is the gross profit margin for HERSHEY 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 9.51% trails the industry average.
- Net operating cash flow has increased to $564.69 million or 15.49% when compared to the same quarter last year. Despite an increase in cash flow, HERSHEY CO's cash flow growth rate is still lower than the industry average growth rate of 49.55%.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- You can view the full Hershey 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.