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Water-Logged And Getting Wetter Stock Of The Day: Stryker Corporation (SYK)

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 Stryker Corporation ( SYK) 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 Stryker Corporation as such a stock due to the following factors:

  • SYK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $136.0 million.
  • SYK has traded 699,441 shares today.
  • SYK traded in a range 215.3% of the normal price range with a price range of $3.43.
  • SYK traded below its daily resistance level (quality: 76 days, meaning that the stock is crossing a resistance level set by the last 76 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.

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More details on SYK:

Stryker Corporation, together with its subsidiaries, operates as a medical technology company. The company operates in three segments: Reconstructive, MedSurg, and Neurotechnology and Spine. The stock currently has a dividend yield of 1.5%. SYK has a PE ratio of 31.0. Currently there are 13 analysts that rate Stryker Corporation a buy, no analysts rate it a sell, and 10 rate it a hold.

The average volume for Stryker Corporation has been 1.7 million shares per day over the past 30 days. Stryker has a market cap of $29.8 billion and is part of the health care sector and health services industry. The stock has a beta of 0.91 and a short float of 1.9% with 3.55 days to cover. Shares are up 4.3% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Stryker Corporation as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Health Care Equipment & Supplies industry average. The net income increased by 43.0% when compared to the same quarter one year prior, rising from $270.00 million to $386.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.3%. Since the same quarter one year prior, revenues slightly increased by 5.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, SYK has a quick ratio of 2.07, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has increased to $672.00 million or 12.75% when compared to the same quarter last year. In addition, STRYKER CORP has also modestly surpassed the industry average cash flow growth rate of 7.34%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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