Today's Water-Logged And Getting Wetter Stock: Pepco Holdings (POM)

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

  • POM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $211.1 million.
  • POM has traded 4.8 million shares today.
  • POM traded in a range 200% of the normal price range with a price range of $2.19.
  • POM traded below its daily resistance level (quality: 9 days, meaning that the stock is crossing a resistance level set by the last 9 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 POM:

Pepco Holdings, Inc., through its subsidiaries, engages in the transmission, distribution, and supply of electricity. The company operates through Power Delivery and Pepco Energy Services segments. It also distributes and supplies natural gas. The stock currently has a dividend yield of 4.5%. POM has a PE ratio of 19. Currently there are no analysts that rate Pepco Holdings a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Pepco Holdings has been 3.1 million shares per day over the past 30 days. Pepco has a market cap of $6.1 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.66 and a short float of 4% with 1.23 days to cover. Shares are down 6.8% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Pepco Holdings as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, good cash flow from operations, impressive record of earnings per share growth and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 8.1%. Since the same quarter one year prior, revenues slightly increased by 2.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electric Utilities industry. The net income increased by 271.4% when compared to the same quarter one year prior, rising from $35.00 million to $130.00 million.
  • Net operating cash flow has significantly increased by 221.90% to $338.00 million when compared to the same quarter last year. In addition, PEPCO HOLDINGS INC has also vastly surpassed the industry average cash flow growth rate of 1.54%.
  • PEPCO HOLDINGS INC reported significant earnings per share improvement 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, PEPCO HOLDINGS INC increased its bottom line by earning $1.26 versus $0.96 in the prior year. For the next year, the market is expecting a contraction of 16.7% in earnings ($1.05 versus $1.26).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Electric Utilities industry and the overall market, PEPCO HOLDINGS INC's return on equity is below that of both the industry average and the S&P 500.

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