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Trade-Ideas: WellPoint (WLP) Is Today's Strong On High Relative Volume Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified WellPoint ( WLP) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified WellPoint as such a stock due to the following factors:

  • WLP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $165.7 million.
  • WLP has traded 585,521 shares today.
  • WLP is trading at 3.84 times the normal volume for the stock at this time of day.
  • WLP is trading at a new high 3.01% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on WLP:

WellPoint, Inc., a health benefits company, through its subsidiaries, offers network-based managed care plans to large and small employer, individual, Medicaid, and senior markets in the United States. The company operates through three segments: Commercial, Consumer, and Other. The stock currently has a dividend yield of 1.8%. WLP has a PE ratio of 10.0. Currently there are 7 analysts that rate WellPoint a buy, 1 analyst rates it a sell, and 10 rate it a hold.

The average volume for WellPoint has been 1.9 million shares per day over the past 30 days. WellPoint has a market cap of $25.6 billion and is part of the health care sector and health services industry. The stock has a beta of 0.60 and a short float of 1.7% with 2.71 days to cover. Shares are up 38.6% year to date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:

  • WLP's revenue growth has slightly outpaced the industry average of 13.7%. Since the same quarter one year prior, revenues rose by 14.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.61, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, WLP has a quick ratio of 1.66, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 38.24% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, WLP should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Health Care Providers & Services industry average, but is less than that of the S&P 500. The net income increased by 3.4% when compared to the same quarter one year prior, going from $856.50 million to $885.20 million.

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