Trade-Ideas LLC identified Kansas City Southern ( KSU) 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 Kansas City Southern as such a stock due to the following factors:

  • KSU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $116.3 million.
  • KSU has traded 1.9 million shares today.
  • KSU traded in a range 264.9% of the normal price range with a price range of $5.18.
  • KSU traded below its daily resistance level (quality: 27 days, meaning that the stock is crossing a resistance level set by the last 27 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 KSU:

Kansas City Southern, through its subsidiaries, engages in the freight rail transportation business. The stock currently has a dividend yield of 1.4%. KSU has a PE ratio of 21. Currently there are 5 analysts that rate Kansas City Southern a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Kansas City Southern has been 1.7 million shares per day over the past 30 days. Kansas City Southern has a market cap of $10.1 billion and is part of the services sector and transportation industry. The stock has a beta of 0.80 and a short float of 5.6% with 4.51 days to cover. Shares are down 24.9% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Kansas City Southern as a buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • 46.10% is the gross profit margin for KANSAS CITY SOUTHERN which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 20.82% trails the industry average.
  • The debt-to-equity ratio is somewhat low, currently at 0.61, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that KSU's debt-to-equity ratio is low, the quick ratio, which is currently 0.67, displays a potential problem in covering short-term cash needs.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.4%. Since the same quarter one year prior, revenues slightly dropped by 6.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • KANSAS CITY SOUTHERN' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, KANSAS CITY SOUTHERN increased its bottom line by earning $4.56 versus $3.18 in the prior year. For the next year, the market is expecting a contraction of 2.4% in earnings ($4.45 versus $4.56).
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and the Road & Rail industry average. The net income has decreased by 4.7% when compared to the same quarter one year ago, dropping from $138.10 million to $131.60 million.

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