SPX (SPW) Is Today's Water-Logged And Getting Wetter Stock

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 SPX ( SPW) 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 SPX as such a stock due to the following factors:

  • SPW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $42.1 million.
  • SPW has traded 360,210 shares today.
  • SPW traded in a range 219% of the normal price range with a price range of $3.04.
  • SPW traded below its daily resistance level (quality: 132 days, meaning that the stock is crossing a resistance level set by the last 132 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 SPW:

SPX Corporation provides specialized engineered solutions worldwide. The company operates through two segments, Flow Technology, and Thermal Equipment and Services. The stock currently has a dividend yield of 1.8%. SPW has a PE ratio of 9.3. Currently there are 6 analysts that rate SPX a buy, 2 analysts rate it a sell, and 5 rate it a hold.

The average volume for SPX has been 403,000 shares per day over the past 30 days. SPX has a market cap of $3.4 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.16 and a short float of 2.7% with 2.28 days to cover. Shares are down 0.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates SPX as a hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • The debt-to-equity ratio is somewhat low, currently at 0.75, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.93 is somewhat weak and could be cause for future problems.
  • The gross profit margin for SPX CORP is currently lower than what is desirable, coming in at 30.30%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.73% is significantly below that of the industry average.
  • Net operating cash flow has decreased to $139.40 million or 46.95% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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