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

  • WBC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $45.6 million.
  • WBC has traded 276,300 shares today.
  • WBC traded in a range 378.3% of the normal price range with a price range of $7.58.
  • WBC traded below its daily resistance level (quality: 303 days, meaning that the stock is crossing a resistance level set by the last 303 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 WBC:

WABCO Holdings Inc., together with its subsidiaries, provides electronic, mechanical, and mechatronic products for commercial truck, trailer, bus, and passenger car manufacturers worldwide. WBC has a PE ratio of 26. Currently there are 5 analysts that rate Wabco Holdings a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Wabco Holdings has been 459,900 shares per day over the past 30 days. Wabco has a market cap of $6.1 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 1.57 and a short float of 2.6% with 3.25 days to cover. Shares are up 1.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Wabco Holdings 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, good cash flow from operations, solid stock price performance and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The debt-to-equity ratio is somewhat low, currently at 0.65, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, WBC has a quick ratio of 2.38, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly increased by 135.75% to $113.40 million when compared to the same quarter last year. In addition, WABCO HOLDINGS INC has also vastly surpassed the industry average cash flow growth rate of -18.67%.
  • Despite the weak revenue results, WBC has outperformed against the industry average of 21.6%. Since the same quarter one year prior, revenues slightly dropped by 9.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • WABCO HOLDINGS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, WABCO HOLDINGS INC reported lower earnings of $4.82 versus $10.37 in the prior year. This year, the market expects an improvement in earnings ($5.55 versus $4.82).
  • After a year of stock price fluctuations, the net result is that WBC's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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