Water-Logged And Getting Wetter Stock Of The Day: Sigma-Aldrich (SIAL)

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

  • SIAL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $198.5 million.
  • SIAL has traded 1.9 million shares today.
  • SIAL traded in a range 239.6% of the normal price range with a price range of $0.67.
  • SIAL traded below its daily resistance level (quality: 1 day, meaning that the stock is crossing a resistance level set by the last 1 calendar day. 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 SIAL:

Sigma-Aldrich Corporation, a life science and high technology company, develops, manufactures, purchases, and distributes various chemicals, biochemicals, and equipment products worldwide. The stock currently has a dividend yield of 0.7%. SIAL has a PE ratio of 35. Currently there are no analysts that rate Sigma-Aldrich a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Sigma-Aldrich has been 1.1 million shares per day over the past 30 days. Sigma-Aldrich has a market cap of $16.7 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 0.14 and a short float of 1% with 0.83 days to cover. Shares are up 1.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sigma-Aldrich as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • SIAL's debt-to-equity ratio is very low at 0.09 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.66, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for SIGMA-ALDRICH CORP is rather high; currently it is at 55.81%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.21% is above that of the industry average.
  • Net operating cash flow has increased to $154.00 million or 33.91% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -2.82%.
  • Compared to its closing price of one year ago, SIAL's share price has jumped by 34.38%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • SIGMA-ALDRICH CORP's earnings per share declined by 11.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SIGMA-ALDRICH CORP increased its bottom line by earning $4.17 versus $4.05 in the prior year. This year, the market expects an improvement in earnings ($4.33 versus $4.17).

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