General Electric (GE) Marked As Today's Roof Leaker 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 General Electric ( GE) 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 General Electric as such a stock due to the following factors:

  • GE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $708.5 million.
  • GE has traded 36.8 million shares today.
  • GE is trading at 2.15 times the normal volume for the stock at this time of day.
  • GE 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 GE:

General Electric Company operates as an infrastructure and financial services company worldwide. The stock currently has a dividend yield of 3.3%. GE has a PE ratio of 18.2. Currently there are 7 analysts that rate General Electric a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for General Electric has been 29.9 million shares per day over the past 30 days. General Electric has a market cap of $269.8 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.24 and a short float of 0.8% with 2.75 days to cover. Shares are down 4.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates General Electric as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, growth in earnings per share, increase in net income and good cash flow from operations. 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:
  • GE's revenue growth has slightly outpaced the industry average of 1.4%. Since the same quarter one year prior, revenues slightly increased by 1.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • GENERAL ELECTRIC CO has improved earnings per share by 6.3% 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, GENERAL ELECTRIC CO increased its bottom line by earning $1.47 versus $1.38 in the prior year. This year, the market expects an improvement in earnings ($1.67 versus $1.47).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Industrial Conglomerates industry average. The net income increased by 10.8% when compared to the same quarter one year prior, going from $3,191.00 million to $3,537.00 million.
  • Net operating cash flow has increased to $6,035.00 million or 15.36% when compared to the same quarter last year. Despite an increase in cash flow, GENERAL ELECTRIC CO's average is still marginally south of the industry average growth rate of 21.17%.

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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