Storm The Castle Stock Of The Day: VeriFone Systems (PAY)
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
(
) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified VeriFone Systems as such a stock due to the following factors:
- PAY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $54.3 million.
- PAY has traded 1.5 million shares today.
- PAY is trading at 14.49 times the normal volume for the stock at this time of day.
- PAY crossed above its 200-day simple moving average.
'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize on. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.
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More details on PAY:
VeriFone Systems, Inc. designs, markets, and services electronic payment solutions at the point of sale (POS) worldwide. Currently there are 9 analysts that rate VeriFone Systems a buy, no analysts rate it a sell, and 7 rate it a hold.
The average volume for VeriFone Systems has been 1.7 million shares per day over the past 30 days. VeriFone Systems has a market cap of $3.9 billion and is part of the consumer goods sector and consumer durables industry. The stock has a beta of 1.97 and a short float of 4.2% with 2.72 days to cover. Shares are down 10.8% year-to-date as of the close of trading on Tuesday.
Analysis:
rates VeriFone Systems as a
. 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. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.
Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 19.9%. Since the same quarter one year prior, revenues rose by 13.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.85, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.14, which illustrates the ability to avoid short-term cash problems.
- 46.02% is the gross profit margin for VERIFONE SYSTEMS INC which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, PAY's net profit margin of 6.32% significantly trails the industry average.
- 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 IT Services industry and the overall market, VERIFONE SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has declined marginally to $51.65 million or 5.96% when compared to the same quarter last year. Despite a decrease in cash flow of 5.96%, VERIFONE SYSTEMS INC is in line with the industry average cash flow growth rate of -13.17%.
- You can view the full VeriFone Systems Ratings Report.
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