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

  • SNA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $79.2 million.
  • SNA has traded 66,711 shares today.
  • SNA is trading at 1.72 times the normal volume for the stock at this time of day.
  • SNA 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.

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More details on SNA:

Snap-on Incorporated manufactures and markets tools, equipment, diagnostics, and repair information and systems solutions for professional users worldwide. The stock currently has a dividend yield of 1.4%. SNA has a PE ratio of 2. Currently there are 4 analysts that rate Snap-on a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Snap-on has been 406,000 shares per day over the past 30 days. Snap-on has a market cap of $8.9 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.03 and a short float of 2.2% with 2.41 days to cover. Shares are up 12.4% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Snap-on 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, growth in earnings per share, increase in net income and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 14.2%. Since the same quarter one year prior, revenues slightly increased by 3.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, SNA has a quick ratio of 1.59, which demonstrates the ability of the company to cover short-term liquidity needs.
  • SNAP-ON INC has improved earnings per share by 12.8% 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, SNAP-ON INC increased its bottom line by earning $7.15 versus $5.93 in the prior year. This year, the market expects an improvement in earnings ($8.04 versus $7.15).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 13.1% when compared to the same quarter one year prior, going from $106.10 million to $120.00 million.
  • The gross profit margin for SNAP-ON INC is rather high; currently it is at 54.73%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 13.17% is above that of the industry average.

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