Phillips 66 (PSX) Showing Signs Of Being 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 Phillips 66 ( PSX) 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 Phillips 66 as such a stock due to the following factors:

  • PSX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $188.9 million.
  • PSX has traded 386,348 shares today.
  • PSX traded in a range 204.1% of the normal price range with a price range of $2.15.
  • PSX traded below its daily resistance level (quality: 25 days, meaning that the stock is crossing a resistance level set by the last 25 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 PSX:

Phillips 66 operates as an energy manufacturing and logistics company. It operates in four segments: Midstream, Chemicals, Refining, Marketing and Specialties. The stock currently has a dividend yield of 2.3%. PSX has a PE ratio of 16.8. Currently there are 8 analysts that rate Phillips 66 a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Phillips 66 has been 3.1 million shares per day over the past 30 days. Phillips 66 has a market cap of $48.7 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.85 and a short float of 2% with 4.63 days to cover. Shares are up 12.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Phillips 66 as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • PSX's revenue growth has slightly outpaced the industry average of 3.5%. Since the same quarter one year prior, revenues slightly increased by 5.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • Compared to its closing price of one year ago, PSX's share price has jumped by 47.17%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, PSX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • PSX's debt-to-equity ratio is very low at 0.29 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 1.00 is somewhat weak and could be cause for future problems.
  • PHILLIPS 66 reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, PHILLIPS 66 reported lower earnings of $5.91 versus $6.41 in the prior year. This year, the market expects an improvement in earnings ($6.16 versus $5.91).

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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