Trade-Ideas: Con-way (CNW) Is Today's

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 Con-way ( CNW) 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 Con-way as such a stock due to the following factors:

  • CNW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $46.0 million.
  • CNW has traded 695,409 shares today.
  • CNW traded in a range 225.8% of the normal price range with a price range of $2.40.
  • CNW traded below its daily resistance level (quality: 125 days, meaning that the stock is crossing a resistance level set by the last 125 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 CNW:

Con-way Inc., together with its subsidiaries, provides transportation, logistics, and supply chain management services to various manufacturing, industrial, and retail customers in North America and internationally. It operates through three segments: Freight, Logistics, and Truckload. The stock currently has a dividend yield of 1.2%. CNW has a PE ratio of 26.4. Currently there are 2 analysts that rate Con-way a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for Con-way has been 722,000 shares per day over the past 30 days. Con-way has a market cap of $2.9 billion and is part of the services sector and transportation industry. The stock has a beta of 1.13 and a short float of 4.2% with 2.15 days to cover. Shares are up 26.1% year-to-date as of the close of trading on Monday.

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 Con-way as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, 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 somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Road & Rail industry average. The net income increased by 25.1% when compared to the same quarter one year prior, rising from $42.90 million to $53.67 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.9%. Since the same quarter one year prior, revenues slightly increased by 8.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, CNW has a quick ratio of 1.55, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has increased to $126.19 million or 16.37% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -2.24%.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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.

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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