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.

Trade-Ideas LLC identified Dominion Resources ( D) 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 Dominion Resources as such a stock due to the following factors:

  • D has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $184.6 million.
  • D has traded 158,718 shares today.
  • D is trading at 1.58 times the normal volume for the stock at this time of day.
  • D 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in D with the Ticky from Trade-Ideas. See the FREE profile for D NOW at Trade-Ideas

More details on D:

Dominion Resources, Inc. produces and transports energy in the United States. The company operates through three segments: Dominion Virginia Power (DVP), Dominion Generation, and Dominion Energy. The stock currently has a dividend yield of 3.5%. D has a PE ratio of 32.8. Currently there are 9 analysts that rate Dominion Resources a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Dominion Resources has been 2.8 million shares per day over the past 30 days. Dominion has a market cap of $43.3 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.25 and a short float of 1.8% with 4.81 days to cover. Shares are down 4.4% year-to-date as of the close of trading on Monday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Dominion Resources as a buy. The company's strengths can be seen in multiple areas, such as its good cash flow from operations 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:
  • Net operating cash flow has significantly increased by 113.04% to $1,029.00 million when compared to the same quarter last year. In addition, DOMINION RESOURCES INC has also vastly surpassed the industry average cash flow growth rate of 45.93%.
  • 38.23% is the gross profit margin for DOMINION RESOURCES INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 8.25% trails the industry average.
  • DOMINION RESOURCES INC's earnings per share declined by 43.2% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, DOMINION RESOURCES INC reported lower earnings of $2.24 versus $3.09 in the prior year. This year, the market expects an improvement in earnings ($3.70 versus $2.24).
  • D, with its decline in revenue, slightly underperformed the industry average of 2.9%. Since the same quarter one year prior, revenues slightly dropped by 7.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • In its most recent trading session, D 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. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

null