Trade-Ideas LLC identified Interpublic Group of Companies ( IPG) 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 Interpublic Group of Companies as such a stock due to the following factors:

  • IPG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $90.3 million.
  • IPG has traded 9.7 million shares today.
  • IPG is trading at 6.57 times the normal volume for the stock at this time of day.
  • IPG 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 IPG:

The Interpublic Group of Companies, Inc. provides advertising and marketing services worldwide. It operates through two segments, Integrated Agency Networks and Constituency Management Group. The stock currently has a dividend yield of 2.5%. IPG has a PE ratio of 21. Currently there are 6 analysts that rate Interpublic Group of Companies a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Interpublic Group of Companies has been 4.3 million shares per day over the past 30 days. Interpublic Group of Companies has a market cap of $9.6 billion and is part of the services sector and media industry. The stock has a beta of 1.62 and a short float of 2.7% with 3.34 days to cover. Shares are up 4.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Interpublic Group of Companies as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, solid stock price performance, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 400.0% when compared to the same quarter one year prior, rising from -$1.80 million to $5.40 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 4.2%. Since the same quarter one year prior, revenues slightly increased by 3.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • This stock has managed to rise its share value by 19.78% over the past twelve months. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Net operating cash flow has increased to -$649.10 million or 18.54% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 3.19%.
  • INTERPUBLIC GROUP OF COS has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, INTERPUBLIC GROUP OF COS reported lower earnings of $1.10 versus $1.12 in the prior year. This year, the market expects an improvement in earnings ($1.31 versus $1.10).

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