Today's Dead Cat Bounce Stock Is Pacific Ethanol (PEIX)

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 Pacific Ethanol ( PEIX) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Pacific Ethanol as such a stock due to the following factors:

  • PEIX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $16.4 million.
  • PEIX has traded 85,177 shares today.
  • PEIX is up 3.6% today.
  • PEIX was down 8.9% yesterday.

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More details on PEIX:

Pacific Ethanol, Inc. produces and markets low-carbon renewable fuels in the United States. It sells ethanol to gasoline refining and distribution companies. PEIX has a PE ratio of 10.1. Currently there is 1 analyst that rates Pacific Ethanol a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Pacific Ethanol has been 1.9 million shares per day over the past 30 days. Pacific Ethanol has a market cap of $270.6 million and is part of the basic materials sector and chemicals industry. The stock has a beta of 2.54 and a short float of 20.6% with 2.93 days to cover. Shares are up 128.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Pacific Ethanol as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.3%. Since the same quarter one year prior, revenues rose by 17.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • PEIX's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.28, which clearly demonstrates the ability to cover short-term cash needs.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PACIFIC ETHANOL INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The gross profit margin for PACIFIC ETHANOL INC is currently extremely low, coming in at 7.74%. Regardless of PEIX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.46% 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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