Trade-Ideas LLC identified Cemex SAB de CV ( CX) 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 Cemex SAB de CV as such a stock due to the following factors:

  • CX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $52.5 million.
  • CX has traded 5.7 million shares today.
  • CX is trading at 3.94 times the normal volume for the stock at this time of day.
  • CX 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 CX:

CEMEX, S.A.B. de C.V. produces, markets, distributes, and sells cement, ready-mix concrete, aggregates, and other construction materials in Mexico and internationally. Currently there are 7 analysts that rate Cemex SAB de CV a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Cemex SAB de CV has been 9.5 million shares per day over the past 30 days. Cemex SAB de CV has a market cap of $8.8 billion and is part of the industrial goods sector and materials & construction industry. Shares are up 22.1% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cemex SAB de CV as a sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and poor profit margins.

Highlights from the ratings report include:
  • CX's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 32.43%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • The gross profit margin for CEMEX SAB DE CV is currently lower than what is desirable, coming in at 32.18%. Regardless of CX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.10% trails the industry average.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Construction Materials industry and the overall market, CEMEX SAB DE CV's return on equity is below that of both the industry average and the S&P 500.
  • CEMEX SAB DE CV 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, CEMEX SAB DE CV turned its bottom line around by earning $0.02 versus -$0.32 in the prior year. This year, the market expects an improvement in earnings ($0.17 versus $0.02).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Construction Materials industry. The net income increased by 125.0% when compared to the same quarter one year prior, rising from -$147.02 million to $36.77 million.

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