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 Linn Energy ( LINE) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Linn Energy as such a stock due to the following factors:

  • LINE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $29.5 million.
  • LINE has traded 327,360 shares today.
  • LINE is up 3.7% today.
  • LINE was down 5% yesterday.

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More details on LINE:

Linn Energy, LLC, an independent oil and natural gas company, acquires and develops oil and natural gas properties in the Unites States. The stock currently has a dividend yield of 37%. Currently there is 1 analyst that rates Linn Energy a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Linn Energy has been 4.5 million shares per day over the past 30 days. Linn Energy has a market cap of $1.2 billion and is part of the basic materials sector and energy industry. The stock has a beta of 0.95 and a short float of 6% with 1.80 days to cover. Shares are down 68.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Linn Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally high debt management risk, disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 82.4% when compared to the same quarter one year ago, falling from -$207.87 million to -$379.13 million.
  • The debt-to-equity ratio is very high at 2.67 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.42, which clearly demonstrates the inability to cover short-term cash 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 Oil, Gas & Consumable Fuels industry and the overall market, LINN ENERGY LLC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for LINN ENERGY LLC is rather low; currently it is at 18.08%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -117.80% is significantly below that of the industry average.
  • Net operating cash flow has decreased to $298.78 million or 37.90% 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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