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 Chimera Investment ( CIM) 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 Chimera Investment as such a stock due to the following factors:

  • CIM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $35.0 million.
  • CIM has traded 246,850 shares today.
  • CIM traded in a range 230.9% of the normal price range with a price range of $0.40.
  • CIM traded below its daily resistance level (quality: 532 days, meaning that the stock is crossing a resistance level set by the last 532 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 CIM:

Chimera Investment Corporation operates as a real estate investment trust in the United States. The stock currently has a dividend yield of 12.8%. CIM has a PE ratio of 5.2. Currently there are no analysts that rate Chimera Investment a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Chimera Investment has been 1.5 million shares per day over the past 30 days. Chimera Investment has a market cap of $3.1 billion and is part of the financial sector and real estate industry. The stock has a beta of 0.62 and a short float of 0.9% with 0.64 days to cover. Shares are down 6% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Chimera Investment as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • CIM's very impressive revenue growth greatly exceeded the industry average of 8.5%. Since the same quarter one year prior, revenues leaped by 169.1%. 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, CHIMERA INVESTMENT CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for CHIMERA INVESTMENT CORP is currently very high, coming in at 71.86%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CIM's net profit margin of 2.35% significantly trails the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 91.0% when compared to the same quarter one year ago, falling from $72.31 million to $6.49 million.
  • Net operating cash flow has significantly decreased to $27.40 million or 67.98% 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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