Alaska Air Group (ALK) Spotted As Roof Leaker Today

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 Alaska Air Group ( ALK) 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 Alaska Air Group as such a stock due to the following factors:

  • ALK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $70.1 million.
  • ALK has traded 1.3 million shares today.
  • ALK is trading at 5.66 times the normal volume for the stock at this time of day.
  • ALK 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.

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More details on ALK:

Alaska Air Group, Inc., through its subsidiaries, provides passengers and cargo air transportation services primarily in the United States. The company operates through Alaska Mainline and Alaska Regional segments. The stock currently has a dividend yield of 1.2%. ALK has a PE ratio of 14. Currently there are 7 analysts that rate Alaska Air Group a buy, 2 analysts rate it a sell, and 3 rate it a hold.

The average volume for Alaska Air Group has been 1.2 million shares per day over the past 30 days. Alaska Air Group has a market cap of $8.5 billion and is part of the services sector and transportation industry. The stock has a beta of 0.98 and a short float of 5.8% with 6.31 days to cover. Shares are up 9.9% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Alaska Air Group as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, expanding profit margins and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • ALK's revenue growth has slightly outpaced the industry average of 3.2%. Since the same quarter one year prior, revenues slightly increased by 3.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 65.92% and other important driving factors, this stock has surged by 32.02% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ALK should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • ALASKA AIR GROUP INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ALASKA AIR GROUP INC increased its bottom line by earning $4.43 versus $3.59 in the prior year. This year, the market expects an improvement in earnings ($5.95 versus $4.43).
  • 35.46% is the gross profit margin for ALASKA AIR GROUP INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 11.74% is above that of the industry average.
  • Net operating cash flow has significantly increased by 112.39% to $514.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 75.22%.

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