Water-Logged And Getting Wetter Stock Of The Day: Trinity Industries (TRN)

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 Trinity Industries ( TRN) 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 Trinity Industries as such a stock due to the following factors:

  • TRN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $73.5 million.
  • TRN has traded 349,634 shares today.
  • TRN traded in a range 256% of the normal price range with a price range of $2.36.
  • TRN traded below its daily resistance level (quality: 23 days, meaning that the stock is crossing a resistance level set by the last 23 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 TRN:

Trinity Industries, Inc. provides various products and services for the energy, transportation, chemical, and construction sectors in the United States, Canada, Mexico, the United Kingdom, Singapore, and Sweden. The stock currently has a dividend yield of 1.1%. TRN has a PE ratio of 9.0. Currently there are 8 analysts that rate Trinity Industries a buy, 1 analyst rates it a sell, and none rate it a hold.

The average volume for Trinity Industries has been 4.2 million shares per day over the past 30 days. Trinity has a market cap of $5.7 billion and is part of the services sector and transportation industry. The stock has a beta of 1.27 and a short float of 16.1% with 11.80 days to cover. Shares are up 33.4% 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 Trinity Industries as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, attractive valuation levels, good cash flow from operations and solid stock price performance. 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:
  • The revenue growth greatly exceeded the industry average of 2.5%. Since the same quarter one year prior, revenues rose by 40.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 42.85% and other important driving factors, this stock has surged by 30.74% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, TRN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • TRINITY INDUSTRIES has improved earnings per share by 42.9% 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, TRINITY INDUSTRIES increased its bottom line by earning $2.34 versus $1.59 in the prior year. This year, the market expects an improvement in earnings ($4.16 versus $2.34).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 50.0% when compared to the same quarter one year prior, rising from $99.60 million to $149.40 million.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Machinery industry and the overall market, TRINITY INDUSTRIES's return on equity exceeds that of both the industry average and the S&P 500.

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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