Trade-Ideas LLC identified USG ( USG) 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 USG as such a stock due to the following factors:

  • USG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $51.5 million.
  • USG has traded 1.1 million shares today.
  • USG is trading at 1.55 times the normal volume for the stock at this time of day.
  • USG 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in USG with the Ticky from Trade-Ideas. See the FREE profile for USG NOW at Trade-Ideas

More details on USG:

USG Corporation, through its subsidiaries, operates as a manufacturer and distributor of building materials worldwide. USG has a PE ratio of 123. Currently there are 4 analysts that rate USG a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for USG has been 1.8 million shares per day over the past 30 days. USG has a market cap of $4.3 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 0.80 and a short float of 13.5% with 5.86 days to cover. Shares are up 4.2% year-to-date as of the close of trading on Tuesday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates USG as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and generally higher debt management risk.

Highlights from the ratings report include:
  • USG's revenue growth has slightly outpaced the industry average of 1.2%. Since the same quarter one year prior, revenues slightly increased by 2.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Building Products industry average. The net income increased by 38.6% when compared to the same quarter one year prior, rising from $57.00 million to $79.00 million.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Building Products industry and the overall market, USG CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Net operating cash flow has declined marginally to $76.00 million or 8.43% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, USG CORP has marginally lower results.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.