Albemarle (ALB) Shows Signs Of Being Water-Logged And Getting Wetter

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 Albemarle ( ALB) 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 Albemarle as such a stock due to the following factors:

  • ALB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $69.9 million.
  • ALB has traded 976,389 shares today.
  • ALB traded in a range 247.5% of the normal price range with a price range of $3.23.
  • ALB traded below its daily resistance level (quality: 7 days, meaning that the stock is crossing a resistance level set by the last 7 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 ALB:

Albemarle Corporation develops, manufactures, and markets engineered specialty chemicals. The stock currently has a dividend yield of 1.8%. ALB has a PE ratio of 13.1. Currently there are 7 analysts that rate Albemarle a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Albemarle has been 1.4 million shares per day over the past 30 days. Albemarle has a market cap of $4.8 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 0.78 and a short float of 14.2% with 9.44 days to cover. Shares are down 1.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Albemarle as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.6%. Since the same quarter one year prior, revenues slightly increased by 8.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.72, 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 1.28, which illustrates the ability to avoid short-term cash problems.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to other companies in the Chemicals industry and the overall market on the basis of return on equity, ALBEMARLE CORP has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • 35.97% is the gross profit margin for ALBEMARLE CORP which we consider to be strong. Regardless of ALB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ALB's net profit margin of 11.33% compares favorably to the industry average.

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