Cott (COT) Is Today's Strong And Under The Radar 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 Cott ( COT) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Cott as such a stock due to the following factors:

  • COT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $6.1 million.
  • COT is making at least a new 3-day high.
  • COT has a PE ratio of 119.
  • COT is mentioned 1.29 times per day on StockTwits.
  • COT has not yet been mentioned on StockTwits today.
  • COT is currently in the upper 20% of its 1-year range.
  • COT is in the upper 35% of its 20-day range.
  • COT is in the upper 45% of its 5-day range.
  • COT is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

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More details on COT:

Cott Corporation, together with its subsidiaries, produces and sells beverages on behalf of retailers, brand owners, and distributors worldwide. The stock currently has a dividend yield of 2.5%. COT has a PE ratio of 119. Currently there are 3 analysts that rate Cott a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Cott has been 677,800 shares per day over the past 30 days. Cott has a market cap of $886.0 million and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.63 and a short float of 2.3% with 2.87 days to cover. Shares are up 38.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cott as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 4.7%. Since the same quarter one year prior, revenues rose by 49.4%. 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.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Beverages industry. The net income increased by 39.0% when compared to the same quarter one year prior, rising from -$4.10 million to -$2.50 million.
  • Compared to its closing price of one year ago, COT's share price has jumped by 34.17%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The debt-to-equity ratio is very high at 2.71 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, COT has a quick ratio of 0.58, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Beverages industry and the overall market, COTT CORP QUE's return on equity significantly trails that of both the industry average and the S&P 500.

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