Trade-Ideas: Headwaters (HW) Is Today's Strong And Under The Radar Stock

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 Headwaters ( HW) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Headwaters as such a stock due to the following factors:

  • HW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $6.8 million.
  • HW is making at least a new 3-day high.
  • HW has a PE ratio of 62.3.
  • HW is mentioned 1.00 times per day on StockTwits.
  • HW has not yet been mentioned on StockTwits today.
  • HW is currently in the upper 20% of its 1-year range.
  • HW is in the upper 35% of its 20-day range.
  • HW is in the upper 45% of its 5-day range.
  • HW is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in HW with the Ticky from Trade-Ideas. See the FREE profile for HW NOW at Trade-Ideas

More details on HW:

Headwaters Incorporated, a building products company, provides products and services in the light and heavy building materials sectors primarily in the United States and Canada. HW has a PE ratio of 62.3. Currently there are 3 analysts that rate Headwaters a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Headwaters has been 472,900 shares per day over the past 30 days. Headwaters has a market cap of $961.3 million and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.43 and a short float of 4.3% with 5.46 days to cover. Shares are up 34.5% year-to-date as of the close of trading on Tuesday.

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 Headwaters as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including poor profit margins and generally higher debt management risk.

Highlights from the ratings report include:
  • HW's revenue growth has slightly outpaced the industry average of 10.6%. Since the same quarter one year prior, revenues rose by 14.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • HEADWATERS INC has improved earnings per share by 27.8% 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. This trend suggests that the performance of the business is improving. During the past fiscal year, HEADWATERS INC increased its bottom line by earning $0.21 versus $0.11 in the prior year. This year, the market expects an improvement in earnings ($0.48 versus $0.21).
  • The debt-to-equity ratio is very high at 5.85 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, HW has managed to keep a strong quick ratio of 1.99, which demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for HEADWATERS INC is currently lower than what is desirable, coming in at 29.82%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 6.72% is above that of the industry average.

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

Trump Takes Aim at Auto Imports; Markets End Mixed -- ICYMI

Trump Takes Aim at Auto Imports; Markets End Mixed -- ICYMI

Video: What Oprah's Content Partnership With Apple Means for the Rest of Tech

Video: What Oprah's Content Partnership With Apple Means for the Rest of Tech

REPLAY: Jim Cramer on the Markets, Oil, Starbucks, Tesla, Okta and Red Hat

REPLAY: Jim Cramer on the Markets, Oil, Starbucks, Tesla, Okta and Red Hat

Flashback Friday: The Market Movers

Flashback Friday: The Market Movers

OPEC Deal Doesn't Boost Production Enough to Drive Down Crude, Gasoline Prices

OPEC Deal Doesn't Boost Production Enough to Drive Down Crude, Gasoline Prices