Strong On High Relative Volume: Rackspace Hosting (RAX)
Trade-Ideas LLC identified
(
) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Rackspace Hosting as such a stock due to the following factors:
- RAX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $69.9 million.
- RAX has traded 1.9 million shares today.
- RAX is trading at 15.96 times the normal volume for the stock at this time of day.
- RAX is trading at a new high 15.02% above yesterday's close.
'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. 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. 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 RAX:
Rackspace Hosting, Inc., through its subsidiaries, provides cloud computing services and managing Web-based IT systems for small and medium-sized businesses and large enterprises worldwide. RAX has a PE ratio of 4. Currently there are 9 analysts that rate Rackspace Hosting a buy, 2 analysts rate it a sell, and 5 rate it a hold.
The average volume for Rackspace Hosting has been 2.6 million shares per day over the past 30 days. Rackspace Hosting has a market cap of $4.0 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.41 and a short float of 9.5% with 4.27 days to cover. Shares are down 42.1% year-to-date as of the close of trading on Monday.
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Analysis:
rates Rackspace Hosting as a
. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow.
Highlights from the ratings report include:
- RACKSPACE HOSTING INC has improved earnings per share by 25.0% 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. This trend suggests that the performance of the business is improving. During the past fiscal year, RACKSPACE HOSTING INC increased its bottom line by earning $0.78 versus $0.60 in the prior year. This year, the market expects an improvement in earnings ($0.84 versus $0.78).
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Internet Software & Services industry average. The net income increased by 30.1% when compared to the same quarter one year prior, rising from $22.45 million to $29.20 million.
- The gross profit margin for RACKSPACE HOSTING INC is rather high; currently it is at 66.51%. Regardless of RAX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, RAX's net profit margin of 5.96% is significantly lower than the industry average.
- Net operating cash flow has declined marginally to $122.90 million or 1.31% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, RACKSPACE HOSTING INC has marginally lower results.
- RAX's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 26.65%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, RAX is still more expensive than most of the other companies in its industry.
- You can view the full Rackspace Hosting Ratings Report.
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