Trade-Ideas LLC identified

Aetna

(

AET

) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Aetna as such a stock due to the following factors:

  • AET has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $238.9 million.
  • AET has traded 906,454 shares today.
  • AET is trading at 2.38 times the normal volume for the stock at this time of day.
  • AET crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on AET:

Aetna Inc. operates as a health care benefits company in the United States. It operates through three segments: Health Care, Group Insurance, and Large Case Pensions. The stock currently has a dividend yield of 0.9%. AET has a PE ratio of 18. Currently there are 14 analysts that rate Aetna a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Aetna has been 3.4 million shares per day over the past 30 days. Aetna has a market cap of $40.6 billion and is part of the health care sector and health services industry. The stock has a beta of 0.27 and a short float of 3.1% with 4.46 days to cover. Shares are up 26.1% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Aetna as a

buy

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, increase in net income, revenue growth and notable return on equity. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • Powered by its strong earnings growth of 36.84% and other important driving factors, this stock has surged by 39.03% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, AET should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • AETNA INC has improved earnings per share by 36.8% 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, AETNA INC increased its bottom line by earning $5.66 versus $5.35 in the prior year. This year, the market expects an improvement in earnings ($7.53 versus $5.66).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Health Care Providers & Services industry average. The net income increased by 33.3% when compared to the same quarter one year prior, rising from $548.80 million to $731.80 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.6%. Since the same quarter one year prior, revenues slightly increased by 4.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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 Health Care Providers & Services industry and the overall market, AETNA INC's return on equity exceeds that of both the industry average and the S&P 500.

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