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Trade-Ideas: Align Technology (ALGN) Is Today's "Water-Logged And Getting Wetter" Stock

Stock quotes in this article: ALGN

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 Align Technology ( ALGN) 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 Align Technology as such a stock due to the following factors:

  • ALGN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $35.4 million.
  • ALGN has traded 803,255 shares today.
  • ALGN traded in a range 207.7% of the normal price range with a price range of $2.37.
  • ALGN traded below its daily resistance level (quality: 71 days, meaning that the stock is crossing a resistance level set by the last 71 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 ALGN with the Ticky from Trade-Ideas. See the FREE profile for ALGN NOW at Trade-Ideas

More details on ALGN:

Align Technology, Inc. operates as a medical device company primarily in the United States and internationally. Currently there are 6 analysts that rate Align Technology a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Align Technology has been 628,900 shares per day over the past 30 days. Align Technology has a market cap of $3.8 billion and is part of the health care sector and health services industry. The stock has a beta of 2.48 and a short float of 7.8% with 6.04 days to cover. Shares are up 71.1% year to date as of the close of trading on Friday.

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 Align Technology 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 good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 1.8%. Since the same quarter one year prior, revenues rose by 12.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ALGN 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. To add to this, ALGN has a quick ratio of 2.44, 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 25.57% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Health Care Equipment & Supplies industry average, but is less than that of the S&P 500. The net income increased by 2.9% when compared to the same quarter one year prior, going from $28.49 million to $29.32 million.
  • Net operating cash flow has significantly increased by 95.04% to $53.31 million when compared to the same quarter last year. In addition, ALIGN TECHNOLOGY INC has also vastly surpassed the industry average cash flow growth rate of -37.82%.

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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