Water-Logged And Getting Wetter: GameStop (GME)
Trade-Ideas LLC identified
(
) 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 GameStop as such a stock due to the following factors:
- GME has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $55.2 million.
- GME has traded 5.9 million shares today.
- GME traded in a range 220.5% of the normal price range with a price range of $2.37.
- GME traded below its daily resistance level (quality: 220 days, meaning that the stock is crossing a resistance level set by the last 220 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 GME:
GameStop Corp. operates as a multichannel video game retailer. The stock currently has a dividend yield of 3.2%. GME has a PE ratio of 12. Currently there are 10 analysts that rate GameStop a buy, 1 analyst rates it a sell, and 3 rate it a hold.
The average volume for GameStop has been 1.7 million shares per day over the past 30 days. GameStop has a market cap of $4.7 billion and is part of the services sector and retail industry. The stock has a beta of 0.96 and a short float of 52.9% with 32.05 days to cover. Shares are up 31.8% year-to-date as of the close of trading on Thursday.
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Analysis:
rates GameStop as a
. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, revenue growth and reasonable valuation levels. We feel its strengths outweigh the fact that the company shows low profit margins.
Highlights from the ratings report include:
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- GAMESTOP CORP has improved earnings per share by 9.1% 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, GAMESTOP CORP increased its bottom line by earning $3.54 versus $3.02 in the prior year. This year, the market expects an improvement in earnings ($3.91 versus $3.54).
- 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 Specialty Retail industry average. The net income increased by 2.8% when compared to the same quarter one year prior, going from $24.60 million to $25.30 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.1%. Since the same quarter one year prior, revenues slightly increased by 1.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- You can view the full GameStop Ratings Report.
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