Water-Logged And Getting Wetter Stock Of The Day: Westlake Chemical (WLK)

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 Westlake Chemical ( WLK) 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 Westlake Chemical as such a stock due to the following factors:

  • WLK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $46.7 million.
  • WLK has traded 420,546 shares today.
  • WLK traded in a range 206.6% of the normal price range with a price range of $3.33.
  • WLK traded below its daily resistance level (quality: 52 days, meaning that the stock is crossing a resistance level set by the last 52 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 WLK with the Ticky from Trade-Ideas. See the FREE profile for WLK NOW at Trade-Ideas

More details on WLK:

Westlake Chemical Corporation manufactures and markets basic chemicals, vinyls, polymers, and fabricated building products. It operates through two segments, Olefins and Vinyls. The stock currently has a dividend yield of 0.7%. WLK has a PE ratio of 18.3. Currently there are 5 analysts that rate Westlake Chemical a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Westlake Chemical has been 498,900 shares per day over the past 30 days. Westlake Chemical has a market cap of $12.2 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 2.15 and a short float of 3.6% with 1.89 days to cover. Shares are up 47.9% 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 Westlake Chemical as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 73.82% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, WLK should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • WESTLAKE CHEMICAL CORP has improved earnings per share by 16.1% 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, WESTLAKE CHEMICAL CORP increased its bottom line by earning $4.55 versus $2.88 in the prior year. This year, the market expects an improvement in earnings ($5.45 versus $4.55).
  • 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 Chemicals industry average. The net income increased by 16.2% when compared to the same quarter one year prior, going from $145.82 million to $169.44 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.5%. Since the same quarter one year prior, revenues slightly increased by 6.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • WLK's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.44, which clearly demonstrates the ability to cover short-term cash needs.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

null

More from Markets

Boeing Is Back to Cruising Altitude; GM Gets Assist From Amazon -- ICYMI

Boeing Is Back to Cruising Altitude; GM Gets Assist From Amazon -- ICYMI

Investors Shouldn't Be Worried About Trump's Trade Tariffs: Ian Bremmer

Investors Shouldn't Be Worried About Trump's Trade Tariffs: Ian Bremmer

Aceto's Search for Deal May Be Slowed by DOJ Subpoena

Aceto's Search for Deal May Be Slowed by DOJ Subpoena

Dow and S&P 500 Finish Higher Amid Strong Corporate Earnings

Dow and S&P 500 Finish Higher Amid Strong Corporate Earnings

Veteran Foreign Affairs Expert Ian Bremmer Reveals How to Price Political Risk

Veteran Foreign Affairs Expert Ian Bremmer Reveals How to Price Political Risk