Weak On High Volume: WellCare Health Plans (WCG)

Trade-Ideas LLC identified WellCare Health Plans (WCG) as a weak on high relative volume candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

WellCare Health Plans

(

WCG

) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified WellCare Health Plans as such a stock due to the following factors:

  • WCG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $37.9 million.
  • WCG has traded 240,522 shares today.
  • WCG is trading at 15.34 times the normal volume for the stock at this time of day.
  • WCG is trading at a new low 10.01% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of 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 (or avoid losses by trimming weak positions). 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 WCG:

WellCare Health Plans, Inc. provides managed care services for government-sponsored health care programs. It operates in three segments: Medicaid Health Plans, Medicare Health Plans, and Medicare PDPs. WCG has a PE ratio of 42. Currently there are 3 analysts that rate WellCare Health Plans a buy, 2 analysts rate it a sell, and 7 rate it a hold.

The average volume for WellCare Health Plans has been 458,000 shares per day over the past 30 days. WellCare Health Plans has a market cap of $4.0 billion and is part of the health care sector and health services industry. The stock has a beta of 0.77 and a short float of 6.6% with 5.50 days to cover. Shares are up 8.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates WellCare Health Plans 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, good cash flow from operations, increase in net income and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • WCG's revenue growth has slightly outpaced the industry average of 8.3%. Since the same quarter one year prior, revenues rose by 10.5%. 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 0.73, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, WCG has a quick ratio of 1.87, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 789.3% when compared to the same quarter one year prior, rising from -$7.50 million to $51.70 million.
  • Net operating cash flow has significantly increased by 110.82% to $25.20 million when compared to the same quarter last year. In addition, WELLCARE HEALTH PLANS INC has also vastly surpassed the industry average cash flow growth rate of -3.80%.
  • Powered by its strong earnings growth of 788.23% and other important driving factors, this stock has surged by 38.18% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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