Campbell Soup (CPB) Spotted As Roof Leaker Today

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 Campbell Soup ( CPB) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Campbell Soup as such a stock due to the following factors:

  • CPB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $61.9 million.
  • CPB has traded 402,260 shares today.
  • CPB is trading at 1.70 times the normal volume for the stock at this time of day.
  • CPB crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on CPB:

Campbell Soup Company, together with its subsidiaries, manufactures and markets convenience food products. It operates through U.S. Simple Meals; Global Baking and Snacking; International Simple Meals and Beverages; U.S. Beverages; and Bolthouse and Foodservice segments. The U.S. The stock currently has a dividend yield of 2.8%. CPB has a PE ratio of 19.1. Currently there is 1 analyst that rates Campbell Soup a buy, 3 analysts rate it a sell, and 9 rate it a hold.

The average volume for Campbell Soup has been 1.1 million shares per day over the past 30 days. Campbell has a market cap of $14.0 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.96 and a short float of 7.1% with 8.89 days to cover. Shares are up 3.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Campbell Soup as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, compelling growth in net income and expanding profit margins. 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:
  • CPB's revenue growth has slightly outpaced the industry average of 1.0%. Since the same quarter one year prior, revenues slightly increased by 7.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • CAMPBELL SOUP CO has improved earnings per share by 16.2% 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 year. We feel that this trend should continue. During the past fiscal year, CAMPBELL SOUP CO increased its bottom line by earning $2.32 versus $2.16 in the prior year. This year, the market expects an improvement in earnings ($2.47 versus $2.32).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food Products industry. The net income increased by 186.7% when compared to the same quarter one year prior, rising from -$158.00 million to $137.00 million.
  • 38.82% is the gross profit margin for CAMPBELL SOUP CO which we consider to be strong. Regardless of CPB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.39% trails 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.

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