Water-Logged And Getting Wetter Stock Of The Day: Huntsman (HUN)

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 Huntsman ( HUN) 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 Huntsman as such a stock due to the following factors:

  • HUN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $98.9 million.
  • HUN has traded 5.3 million shares today.
  • HUN traded in a range 205.8% of the normal price range with a price range of $1.59.
  • HUN traded below its daily resistance level (quality: 43 days, meaning that the stock is crossing a resistance level set by the last 43 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 HUN:

Huntsman Corporation, together with its subsidiaries, manufactures and sells differentiated organic and inorganic chemical products worldwide. The company operates in five segments: Polyurethanes, Performance Products, Advanced Materials, Textile Effects, and Pigments. The stock currently has a dividend yield of 2%. HUN has a PE ratio of 15.2. Currently there are 6 analysts that rate Huntsman a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Huntsman has been 4.0 million shares per day over the past 30 days. Huntsman has a market cap of $6.2 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 2.23 and a short float of 8.3% with 3.79 days to cover. Shares are up 0.7% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Huntsman as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, attractive valuation levels, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 193.8% when compared to the same quarter one year prior, rising from $64.00 million to $188.00 million.
  • 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 1.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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. Compared to other companies in the Chemicals industry and the overall market on the basis of return on equity, HUNTSMAN CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.

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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