Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified

Allscripts Healthcare Solutions

(

MDRX

) 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 Allscripts Healthcare Solutions as such a stock due to the following factors:

  • MDRX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $45.4 million.
  • MDRX has traded 2.1 million shares today.
  • MDRX traded in a range 246.4% of the normal price range with a price range of $0.72.
  • MDRX traded below its daily resistance level (quality: 52 days, meaning that the stock is crossing a resistance level set by the last 52 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 MDRX:

Allscripts Healthcare Solutions, Inc. provides clinical, financial, electronic health records (EHR), connectivity, hosting, outsourcing, analytics, patient engagement, and population health products and services in the United States and Canada. Currently there are 8 analysts that rate Allscripts Healthcare Solutions a buy, no analysts rate it a sell, and 14 rate it a hold.

The average volume for Allscripts Healthcare Solutions has been 2.9 million shares per day over the past 30 days. Allscripts Healthcare has a market cap of $2.6 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.39 and a short float of 13.2% with 5.36 days to cover. Shares are up 9.1% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Allscripts Healthcare Solutions as a

hold

. 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 good cash flow from operations. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:

  • ALLSCRIPTS HEALTHCARE SOLTNS reported significant earnings per share improvement 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ALLSCRIPTS HEALTHCARE SOLTNS continued to lose money by earning -$0.37 versus -$0.59 in the prior year. This year, the market expects an improvement in earnings ($0.43 versus -$0.37).
  • 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 Technology industry average. The net income increased by 51.4% when compared to the same quarter one year prior, rising from -$20.74 million to -$10.08 million.
  • 49.24% is the gross profit margin for ALLSCRIPTS HEALTHCARE SOLTNS which we consider to be strong. Regardless of MDRX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MDRX's net profit margin of -3.01% significantly underperformed when compared to the industry average.
  • 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 Technology industry and the overall market, ALLSCRIPTS HEALTHCARE SOLTNS's return on equity significantly trails that of both the industry average and the S&P 500.
  • MDRX has underperformed the S&P 500 Index, declining 9.07% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

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