Trade-Ideas LLC identified

Digital Realty

(

DLR

) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Digital Realty as such a stock due to the following factors:

  • DLR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $192.5 million.
  • DLR has a PE ratio of 95.
  • DLR is currently in the upper 30% of its 1-year range.
  • DLR is in the upper 25% of its 20-day range.
  • DLR is in the upper 35% of its 5-day range.
  • DLR is currently trading above yesterday's high.
  • DLR has experienced a gap between today's open and yesterday's close of 0.9%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on DLR:

Digital Realty Trust, Inc., a real estate investment trust (REIT), through its controlling interest in Digital Realty Trust, L.P., engages in the ownership, acquisition, development, redevelopment, and management of technology-related real estate. The stock currently has a dividend yield of 3.4%. DLR has a PE ratio of 95. Currently there are 9 analysts that rate Digital Realty a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Digital Realty has been 2.0 million shares per day over the past 30 days. Digital has a market cap of $15.2 billion and is part of the financial sector and real estate industry. The stock has a beta of -0.03 and a short float of 18.3% with 13.02 days to cover. Shares are up 37.7% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Digital Realty as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 12.0%. Since the same quarter one year prior, revenues rose by 24.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $179.36 million or 29.10% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 11.45%.
  • Compared to its closing price of one year ago, DLR's share price has jumped by 56.86%, exceeding the performance of the broader market during that same time frame. 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.
  • DIGITAL REALTY TRUST INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, DIGITAL REALTY TRUST INC increased its bottom line by earning $1.61 versus $0.98 in the prior year. For the next year, the market is expecting a contraction of 34.2% in earnings ($1.06 versus $1.61).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 48.8% when compared to the same quarter one year ago, falling from $120.18 million to $61.55 million.

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