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 Jack In The Box ( JACK) 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 Jack In The Box as such a stock due to the following factors:

  • JACK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $52.4 million.
  • JACK has traded 426,875 shares today.
  • JACK traded in a range 260.5% of the normal price range with a price range of $4.67.
  • JACK traded below its daily resistance level (quality: 8 days, meaning that the stock is crossing a resistance level set by the last 8 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 JACK:

Jack in the Box Inc. operates and franchises Jack in the Box quick-service restaurants and Qdoba Mexican Grill fast-casual restaurants in the United States. The stock currently has a dividend yield of 1.2%. JACK has a PE ratio of 37. Currently there are 7 analysts that rate Jack In The Box a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Jack In The Box has been 642,200 shares per day over the past 30 days. Jack In The Box has a market cap of $3.6 billion and is part of the services sector and leisure industry. The stock has a beta of 0.76 and a short float of 3.9% with 2.60 days to cover. Shares are up 21.5% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Jack In The Box as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations, impressive record of earnings per share growth and compelling growth in net income. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • JACK's revenue growth has slightly outpaced the industry average of 4.5%. Since the same quarter one year prior, revenues slightly increased by 5.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • JACK IN THE BOX INC has improved earnings per share by 41.9% 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, JACK IN THE BOX INC increased its bottom line by earning $2.26 versus $1.84 in the prior year. This year, the market expects an improvement in earnings ($3.00 versus $2.26).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 45.6% when compared to the same quarter one year prior, rising from $15.80 million to $23.01 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, JACK IN THE BOX INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 59.60% to $43.57 million when compared to the same quarter last year. In addition, JACK IN THE BOX INC has also vastly surpassed the industry average cash flow growth rate of -63.16%.

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