Trade-Ideas LLC identified Tempur Sealy International ( TPX) 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 Tempur Sealy International as such a stock due to the following factors:

  • TPX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $61.5 million.
  • TPX has traded 2.1 million shares today.
  • TPX traded in a range 221.4% of the normal price range with a price range of $5.08.
  • TPX traded below its daily resistance level (quality: 307 days, meaning that the stock is crossing a resistance level set by the last 307 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 TPX:

Tempur Sealy International, Inc., together with its subsidiaries, develops, manufactures, markets, and distributes bedding products worldwide. It operates through two segments, North America and International. TPX has a PE ratio of 29. Currently there are 6 analysts that rate Tempur Sealy International a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Tempur Sealy International has been 772,200 shares per day over the past 30 days. Tempur Sealy International has a market cap of $3.9 billion and is part of the consumer goods sector and consumer durables industry. The stock has a beta of 1.24 and a short float of 5% with 2.66 days to cover. Shares are down 14.3% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Tempur Sealy International as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, 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 generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • TEMPUR SEALY INTL INC has improved earnings per share by 6.7% 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 year. We feel that this trend should continue. During the past fiscal year, TEMPUR SEALY INTL INC increased its bottom line by earning $1.75 versus $1.27 in the prior year. This year, the market expects an improvement in earnings ($3.20 versus $1.75).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.8%. Since the same quarter one year prior, revenues slightly increased by 6.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 42.94% is the gross profit margin for TEMPUR SEALY INTL INC 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 4.56% trails the industry average.
  • Net operating cash flow has increased to $132.10 million or 21.75% when compared to the same quarter last year. Despite an increase in cash flow of 21.75%, TEMPUR SEALY INTL INC is still growing at a significantly lower rate than the industry average of 123.90%.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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. We feel, however, that the other strengths this company displays justify these higher price levels.

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