Water-Logged And Getting Wetter Stock Of The Day: Bemis (BMS)

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 Bemis ( BMS) 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 Bemis as such a stock due to the following factors:

  • BMS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $32.8 million.
  • BMS has traded 14.9 million shares today.
  • BMS traded in a range 249.9% of the normal price range with a price range of $1.33.
  • BMS traded below its daily resistance level (quality: 1 day, meaning that the stock is crossing a resistance level set by the last 1 calendar day. 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 BMS:

Bemis Company, Inc. manufactures and sells packaging products and pressure sensitive materials in North America, Latin America, Europe, and the Asia-Pacific. The company operates in three segments: U.S. Packaging, Global Packaging, and Pressure Sensitive Materials. The stock currently has a dividend yield of 2.7%. BMS has a PE ratio of 16.2. Currently there are no analysts that rate Bemis a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Bemis has been 720,700 shares per day over the past 30 days. Bemis has a market cap of $4.0 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 0.90 and a short float of 4.6% with 5.57 days to cover. Shares are down 0.9% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Bemis as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • BEMIS CO INC has improved earnings per share by 29.8% 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. During the past fiscal year, BEMIS CO INC increased its bottom line by earning $1.91 versus $1.65 in the prior year. This year, the market expects an improvement in earnings ($2.29 versus $1.91).
  • The debt-to-equity ratio is somewhat low, currently at 0.91, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.10, which illustrates the ability to avoid short-term cash problems.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Containers & Packaging industry and the overall market on the basis of return on equity, BEMIS CO INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • BMS, with its decline in revenue, underperformed when compared the industry average of 9.8%. Since the same quarter one year prior, revenues slightly dropped by 2.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • In its most recent trading session, BMS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.


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