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Qihoo 360 Technology (QIHU) Marked As Today's Roof Leaker 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 Qihoo 360 Technology ( QIHU) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Qihoo 360 Technology as such a stock due to the following factors:

  • QIHU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $195.3 million.
  • QIHU has traded 390,509 shares today.
  • QIHU is trading at 1.69 times the normal volume for the stock at this time of day.
  • QIHU crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in QIHU with the Ticky from Trade-Ideas. See the FREE profile for QIHU NOW at Trade-Ideas

More details on QIHU:

Qihoo 360 Technology Co. Ltd. provides Internet and mobile security products and services in the People's Republic of China. QIHU has a PE ratio of 84.6. Currently there are 9 analysts that rate Qihoo 360 Technology a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Qihoo 360 Technology has been 3.0 million shares per day over the past 30 days. Qihoo 360 Technology has a market cap of $11.8 billion and is part of the technology sector and computer software & services industry. Shares are up 13.5% year-to-date as of the close of trading on Monday.

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 Qihoo 360 Technology as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, notable return on equity and good cash flow from operations. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:

  • QIHU's very impressive revenue growth greatly exceeded the industry average of 21.2%. Since the same quarter one year prior, revenues leaped by 141.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • QIHOO 360 TECHNOLGY CO -ADR reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, QIHOO 360 TECHNOLGY CO -ADR increased its bottom line by earning $0.76 versus $0.40 in the prior year. This year, the market expects an improvement in earnings ($2.45 versus $0.76).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 784.9% when compared to the same quarter one year prior, rising from $5.55 million to $49.12 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, QIHOO 360 TECHNOLGY CO -ADR's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 459.59% to $100.46 million when compared to the same quarter last year. In addition, QIHOO 360 TECHNOLGY CO -ADR has also vastly surpassed the industry average cash flow growth rate of 23.19%.

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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