Today's Water-Logged And Getting Wetter Stock: Kellogg (K)

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 Kellogg ( K) 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 Kellogg as such a stock due to the following factors:

  • K has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $91.5 million.
  • K has traded 918,006 shares today.
  • K traded in a range 244.7% of the normal price range with a price range of $1.72.
  • K traded below its daily resistance level (quality: 4 days, meaning that the stock is crossing a resistance level set by the last 4 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.

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

More details on K:

Kellogg Company, together with its subsidiaries, manufactures and markets ready-to-eat cereal and convenience foods. The company operates through U.S. Morning Foods, U.S. Snacks, U.S. Specialty, North America Other, Europe, Latin America, and Asia Pacific segments. The stock currently has a dividend yield of 3.1%. K has a PE ratio of 36.5. Currently there is 1 analyst that rates Kellogg a buy, 4 analysts rate it a sell, and 7 rate it a hold.

The average volume for Kellogg has been 2.1 million shares per day over the past 30 days. Kellogg has a market cap of $22.8 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.77 and a short float of 3.7% with 6.70 days to cover. Shares are down 2.4% 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 Kellogg as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and generally higher debt management risk.

Highlights from the ratings report include:
  • K's revenue growth has slightly outpaced the industry average of 9.5%. Since the same quarter one year prior, revenues slightly increased by 0.5%. 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.
  • Net operating cash flow has increased to $616.00 million or 47.36% when compared to the same quarter last year. Despite an increase in cash flow, KELLOGG CO's average is still marginally south of the industry average growth rate of 56.71%.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Food Products industry and the overall market, KELLOGG CO's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for KELLOGG CO is currently lower than what is desirable, coming in at 29.14%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -8.33% is significantly below that of the industry average.
  • The share price of KELLOGG CO has not done very well: it is down 5.24% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

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.

If you liked this article you might like

What's Behind the Hound of Hades' Stock Market Rampage

What's Behind the Hound of Hades' Stock Market Rampage

Hershey Needs These New Candy Bars to Be Hits This Year

Hershey Needs These New Candy Bars to Be Hits This Year

Here's Who Might Be on Amazon's M&A Shopping List in 2018

Here's Who Might Be on Amazon's M&A Shopping List in 2018

25 Stocks That Could Have a Terrible Start to 2018

25 Stocks That Could Have a Terrible Start to 2018

PepsiCo Under Fire as Smaller Snackmakers Bulk Up in Healthy Organic

PepsiCo Under Fire as Smaller Snackmakers Bulk Up in Healthy Organic