Wesco International (WCC) 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 Wesco International ( WCC) 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 Wesco International as such a stock due to the following factors:

  • WCC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $33.0 million.
  • WCC has traded 571,036 shares today.
  • WCC traded in a range 242% of the normal price range with a price range of $2.25.
  • WCC traded below its daily resistance level (quality: 66 days, meaning that the stock is crossing a resistance level set by the last 66 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 WCC:

WESCO International, Inc. distributes electrical, industrial, and communications maintenance, repair, and operating (MRO) products; and original equipment manufacturers products and construction materials in North America and internationally. WCC has a PE ratio of 14. Currently there are 5 analysts that rate Wesco International a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Wesco International has been 529,600 shares per day over the past 30 days. Wesco International has a market cap of $3.2 billion and is part of the services sector and wholesale industry. The stock has a beta of 1.46 and a short float of 12% with 11.57 days to cover. Shares are down 5.4% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Wesco International as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 5.3%. Since the same quarter one year prior, revenues slightly increased by 0.3%. 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 debt-to-equity ratio is somewhat low, currently at 0.76, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.31, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has significantly increased by 92.78% to $90.06 million when compared to the same quarter last year. In addition, WESCO INTL INC has also vastly surpassed the industry average cash flow growth rate of 22.71%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Trading Companies & Distributors industry and the overall market on the basis of return on equity, WESCO INTL INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

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