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Trade-Ideas: SINA Corporation (SINA) Is Today's Momo Momentum 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 SINA Corporation ( SINA) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified SINA Corporation as such a stock due to the following factors:

  • SINA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $189.1 million.
  • SINA has a PE ratio of 134.1.
  • SINA is currently in the upper 30% of its 1-year range.
  • SINA is in the upper 25% of its 20-day range.
  • SINA is in the upper 35% of its 5-day range.
  • SINA is currently trading above yesterday's high.
  • SINA has experienced a gap between today's open and yesterday's close of 3%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on SINA:

SINA Corporation, through its subsidiaries, operates as an online media company in the People's Republic of China. SINA has a PE ratio of 134.1. Currently there are 9 analysts that rate SINA Corporation a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for SINA Corporation has been 2.3 million shares per day over the past 30 days. SINA has a market cap of $4.3 billion and is part of the technology sector and internet industry. The stock has a beta of 2.10 and a short float of 2.7% with 0.64 days to cover. Shares are up 28.2% year to date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates SINA Corporation as a hold. 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 and reasonable valuation levels. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 21.9%. Since the same quarter one year prior, revenues rose by 18.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • SINA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.83, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for SINA CORP is rather high; currently it is at 51.28%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -10.45% is in-line with the industry average.
  • The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Internet Software & Services industry average. The net income increased by 4.1% when compared to the same quarter one year prior, going from -$13.74 million to -$13.17 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Internet Software & Services industry and the overall market, SINA CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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