Water-Logged And Getting Wetter: Check Point Software Technologies (CHKP)

Trade-Ideas LLC identified Check Point Software Technologies (CHKP) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Check Point Software Technologies

(

CHKP

) 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 Check Point Software Technologies as such a stock due to the following factors:

  • CHKP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $109.7 million.
  • CHKP has traded 1.8 million shares today.
  • CHKP traded in a range 241.4% of the normal price range with a price range of $3.44.
  • CHKP traded below its daily resistance level (quality: 25 days, meaning that the stock is crossing a resistance level set by the last 25 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 CHKP:

Check Point Software Technologies Ltd. offers software and combined hardware products and services for IT security worldwide. The company offers a portfolio of network security, endpoint security, data security, and management solutions. CHKP has a PE ratio of 22. Currently there are 7 analysts that rate Check Point Software Technologies a buy, no analysts rate it a sell, and 11 rate it a hold.

The average volume for Check Point Software Technologies has been 1.4 million shares per day over the past 30 days. Check Point Software has a market cap of $14.3 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.93 and a short float of 8.9% with 7.97 days to cover. Shares are up 2.8% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Check Point Software Technologies 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, notable return on equity, expanding profit margins and growth in earnings per share. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • CHKP's revenue growth has slightly outpaced the industry average of 0.7%. Since the same quarter one year prior, revenues slightly increased by 8.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CHKP 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, CHKP has a quick ratio of 1.61, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Software industry and the overall market, CHECK POINT SOFTWARE TECHN's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for CHECK POINT SOFTWARE TECHN is currently very high, coming in at 89.66%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 41.41% significantly outperformed against the industry average.
  • CHECK POINT SOFTWARE TECHN has improved earnings per share by 10.5% 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, CHECK POINT SOFTWARE TECHN increased its bottom line by earning $3.74 versus $3.43 in the prior year. This year, the market expects an improvement in earnings ($4.54 versus $3.74).

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