Trade-Ideas: NASDAQ OMX Group (NDAQ) Is Today's "Water-Logged And Getting Wetter" 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 NASDAQ OMX Group (NDAQ) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified NASDAQ OMX Group as such a stock due to the following factors:
- NDAQ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $35.8 million.
- NDAQ has traded 385,984 shares today.
- NDAQ traded in a range 358.1% of the normal price range with a price range of $1.89.
- NDAQ traded below its daily resistance level (quality: 111 days, meaning that the stock is crossing a resistance level set by the last 111 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).
Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.EXCLUSIVE OFFER: Get the inside scoop on opportunities in NDAQ with the Ticky from Trade-Ideas. See the FREE profile for NDAQ NOW at Trade-IdeasMore details on NDAQ: The NASDAQ OMX Group, Inc. delivers trading, clearing, exchange technology, regulatory, securities listing, and public company services worldwide. The stock currently has a dividend yield of 1.7%. NDAQ has a PE ratio of 17.4. Currently there are 8 analysts that rate NASDAQ OMX Group a buy, no analysts rate it a sell, and 3 rate it a hold.The average volume for NASDAQ OMX Group has been 1.2 million shares per day over the past 30 days. NASDAQ OMX Group has a market cap of $5.2 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.02 and a short float of 1.5% with 1.48 days to cover. Shares are up 26.2% year to date as of the close of trading on Wednesday.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.TheStreetRatings.com Analysis:TheStreet Quant Ratings rates NASDAQ OMX Group 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 and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.2%. Since the same quarter one year prior, revenues slightly increased by 1.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.48, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 1.00 is somewhat weak and could be cause for future problems.
- Compared to its closing price of one year ago, NDAQ's share price has jumped by 33.64%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- NASDAQ OMX GROUP INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, NASDAQ OMX GROUP INC reported lower earnings of $2.03 versus $2.14 in the prior year. This year, the market expects an improvement in earnings ($2.56 versus $2.03).
- The gross profit margin for NASDAQ OMX GROUP INC is currently lower than what is desirable, coming in at 26.04%. Regardless of NDAQ'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 10.81% trails the industry average.
- You can view the full NASDAQ OMX Group Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
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