Headwaters Inc. (HW) Stock Moves Down and Here’s Why

Headwaters Inc. (NYSE: HW) shares rose on Monday Nov 21 with heavier trade volume than normal after a number of analysts weighed in on the investing value of the stock with a downgraded rating.

Meanwhile, stocks were set to open up this morning. The Dow Jones Industrial Average futures YMZ6, +0.20% was 10 points, or less than 0.1%, higher at 18,863, while S&P 500 index futures ESZ6, +0.44% rose 3.95 points, or 0.2%, at 2,184.75. Nasdaq-100 NQZ6, +0.74% added 12.25 points, or 0.2%, to 4,820.75.

Analysts at Canaccord Genuity downgraded shares of Headwaters Inc. (NYSE: HW) from Buy to Hold in a research note to investors today. The company currently has a rating of Hold on the shares. The one-year price target of $21.83 is a decrease compared to the opening price of $23.57, that has caused a fair amount of other analysts to comment on the stock recently. Looking back over the last 52 weeks, Headwaters Inc. stock has a high of $23.87. Downgrades happen when analysts believe that the future prospects for the security have dropped from the original recommendation, usually due to a considerable and major change in the company’s actions, future outlook or industry.

Headwaters Inc. (NYSE: HW) shares last traded at $23.73, a spike of $3.64 or 18.12% over the previous closing price. Opening at $23.57, they fluctuated from $23.50 and $23.87 throughout the day.

Headwaters Inc. (NYSE: HW) currently has a market cap of 1.76B.

Headwaters Inc. (NYSE: HW) Average Daily Trading Volume

2,876,933 shares traded hands yesterday, higher than the norm, out of a total float 62,525,000. Excessive volume aggregation by institutional investors may be on the horizon as the combination of substantial increases in trading volume and price inflation can be deciding factors.

As with all possible breakouts, investors look for volume to be at least 40%-50% above normal on the breakout to indicate that fund managers and other professional investors are jumping in.

Institutional sponsorship is defined by ownership of a stock by mutual funds, banks, pension funds and other large institutions.

These professional investors retain substantial teams of analysts that investigate thousands of stocks, so it is good confirmation to see them taking a postion in a stock you are considering.

Headwaters Inc. (NYSE: HW) Moving Averages

A moving average can also act as support or resistance. In an uptrend a 50-day, 100-day or 200-day moving average may act as a support level, as shown in the figure below.

This is because the average acts like a floor (support), so the price bounces up off of it.

In a downtrend a moving average may act as resistance; like a ceiling, the price hits it and then starts to drop again.

By identifying trends, moving averages allow investors to make those trends work in their favor and increase the number of winning trades.

Trades for Headwaters Inc. (NYSE: HW) have ranged from $13.62 – 23.87, and the stock now has a 50-day MA of $17.61 and 200-day MA of $18.17. Today’s last price is 0.59%% below the 52 week high of $23.87.

Earnings growth is a critical factor to consider when buying stocks and investors identify companies that have grown their earnings by at least 25% over a 3 year period.

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