Trade-Ideas LLC identified

Diamond Resorts International

(

DRII

) 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 Diamond Resorts International as such a stock due to the following factors:

  • DRII has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $33.9 million.
  • DRII has traded 102,045 shares today.
  • DRII traded in a range 372.3% of the normal price range with a price range of $0.46.
  • DRII traded below its daily resistance level (quality: 33 days, meaning that the stock is crossing a resistance level set by the last 33 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 DRII:

TheStreet Recommends

Diamond Resorts International, Inc. operates in the hospitality and vacation ownership industry in the continental United States, Hawaii, Canada, Mexico, the Caribbean, Central America, South America, Europe, Asia, Australia, New Zealand, and Africa. DRII has a PE ratio of 14. Currently there is 1 analyst that rates Diamond Resorts International a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Diamond Resorts International has been 2.2 million shares per day over the past 30 days. Diamond Resorts International has a market cap of $2.1 billion and is part of the services sector and leisure industry. The stock has a beta of 2.08 and a short float of 56.4% with 8.42 days to cover. Shares are up 18.2% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Diamond Resorts International as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 8.3%. Since the same quarter one year prior, revenues rose by 18.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • Net operating cash flow has declined marginally to $42.02 million or 8.21% when compared to the same quarter last year. Despite a decrease in cash flow of 8.21%, DIAMOND RESORTS INTL is still significantly exceeding the industry average of -79.94%.
  • The debt-to-equity ratio is very high at 3.78 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.

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