Celanese (CE) Falls Further As It's Water-Logged And Getting Wetter

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 Celanese ( CE) 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 Celanese as such a stock due to the following factors:

  • CE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $103.9 million.
  • CE has traded 775,443 shares today.
  • CE traded in a range 201.8% of the normal price range with a price range of $2.31.
  • CE traded below its daily resistance level (quality: 67 days, meaning that the stock is crossing a resistance level set by the last 67 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 CE:

Celanese Corporation, a technology and specialty materials company, manufactures and sells value-added chemicals, thermoplastic polymers, and other chemical-based products worldwide. The stock currently has a dividend yield of 1.6%. CE has a PE ratio of 7.7. Currently there are 6 analysts that rate Celanese a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Celanese has been 1.1 million shares per day over the past 30 days. Celanese has a market cap of $9.7 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 2.05 and a short float of 3% with 1.60 days to cover. Shares are up 13.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Celanese as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, attractive valuation levels, good cash flow from operations and solid stock price performance. 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:
  • CE's revenue growth has slightly outpaced the industry average of 7.0%. Since the same quarter one year prior, revenues slightly increased by 7.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 100.00% and other important driving factors, this stock has surged by 29.16% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Chemicals industry and the overall market, CELANESE CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 94.7% when compared to the same quarter one year prior, rising from $133.00 million to $259.00 million.

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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