Trade-Ideas LLC identified

Health Net

(

HNT

) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Health Net as such a stock due to the following factors:

  • HNT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $82.5 million.
  • HNT has traded 129,516 shares today.
  • HNT traded in a range 238.2% of the normal price range with a price range of $5.08.
  • HNT traded above its daily resistance level (quality: 3 days, meaning that the stock is crossing a resistance level set by the last 3 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' 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 positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on HNT:

TheStreet Recommends

Health Net, Inc. provides managed health care services through health plans and government-sponsored managed care plans in the United States. It operates through Western Region Operations and Government Contracts segments. HNT has a PE ratio of 32. Currently there are 2 analysts that rate Health Net a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Health Net has been 878,900 shares per day over the past 30 days. Health Net has a market cap of $4.9 billion and is part of the health care sector and health services industry. The stock has a beta of 0.56 and a short float of 2.2% with 1.25 days to cover. Shares are down 11.1% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Health Net 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, increase in net income, solid stock price performance and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • HNT's revenue growth has slightly outpaced the industry average of 9.4%. Since the same quarter one year prior, revenues slightly increased by 9.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.34, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.38, which illustrates the ability to avoid short-term cash problems.
  • 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 774.0% when compared to the same quarter one year prior, rising from -$8.94 million to $60.25 million.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • HEALTH NET INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HEALTH NET INC reported lower earnings of $1.80 versus $2.12 in the prior year. This year, the market expects an improvement in earnings ($3.33 versus $1.80).

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