Water-Logged And Getting Wetter Stock Of The Day: Hormel Foods (HRL)

Trade-Ideas LLC identified Hormel Foods ( HRL) 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 Hormel Foods as such a stock due to the following factors:

  • HRL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $118.4 million.
  • HRL has traded 2.7 million shares today.
  • HRL traded in a range 208.5% of the normal price range with a price range of $1.52.
  • HRL traded below its daily resistance level (quality: 10 days, meaning that the stock is crossing a resistance level set by the last 10 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 HRL:

Hormel Foods Corporation produces and markets various meat and food products worldwide. The company operates in five segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, Specialty Foods, and International & Other. The stock currently has a dividend yield of 1.4%. HRL has a PE ratio of 29. Currently there are no analysts that rate Hormel Foods a buy, 2 analysts rate it a sell, and 4 rate it a hold.

The average volume for Hormel Foods has been 3.0 million shares per day over the past 30 days. Hormel has a market cap of $21.1 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.64 and a short float of 9.5% with 8.37 days to cover. Shares are up 1.8% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Hormel Foods as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, notable return on equity, reasonable valuation levels and good cash flow from operations. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 34.37% and other important driving factors, this stock has surged by 44.22% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HRL should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • HORMEL FOODS CORP has improved earnings per share by 34.4% 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. We feel that this trend should continue. During the past fiscal year, HORMEL FOODS CORP increased its bottom line by earning $1.27 versus $1.12 in the prior year. This year, the market expects an improvement in earnings ($1.58 versus $1.27).
  • 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. Compared to other companies in the Food Products industry and the overall market, HORMEL FOODS CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $278.69 million or 13.05% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -14.12%.

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