Trade-Ideas LLC identified SanDisk ( SNDK) 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 SanDisk as such a stock due to the following factors:

  • SNDK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $272.1 million.
  • SNDK has traded 233,228 shares today.
  • SNDK is trading at 2.33 times the normal volume for the stock at this time of day.
  • SNDK 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 SNDK:

SanDisk Corporation designs, develops, manufactures, and markets data storage solutions in the United States and internationally. The stock currently has a dividend yield of 1.8%. SNDK has a PE ratio of 32. Currently there are 6 analysts that rate SanDisk a buy, no analysts rate it a sell, and 12 rate it a hold.

The average volume for SanDisk has been 2.3 million shares per day over the past 30 days. SanDisk has a market cap of $13.3 billion and is part of the technology sector and computer hardware industry. The stock has a beta of 2.51 and a short float of 6.8% with 3.40 days to cover. Shares are down 11.3% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates SanDisk as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

Highlights from the ratings report include:
  • The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, SNDK has a quick ratio of 2.29, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 48.45% is the gross profit margin for SANDISK CORP which we consider to be strong. Regardless of SNDK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SNDK's net profit margin of 9.15% is significantly lower than the industry average.
  • SANDISK CORP's earnings per share declined by 40.4% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, SANDISK CORP reported lower earnings of $4.23 versus $4.37 in the prior year. For the next year, the market is expecting a contraction of 23.4% in earnings ($3.24 versus $4.23).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Computers & Peripherals industry. The net income has significantly decreased by 49.4% when compared to the same quarter one year ago, falling from $262.66 million to $133.01 million.

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