Trade-Ideas LLC identified

Facebook

(

FB

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

  • FB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.2 billion.
  • FB has a PE ratio of 75.
  • FB is currently in the upper 30% of its 1-year range.
  • FB is in the upper 25% of its 20-day range.
  • FB is in the upper 35% of its 5-day range.
  • FB is currently trading above yesterday's high.
  • FB has experienced a gap between today's open and yesterday's close of 1%.

'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 FB:

Facebook, Inc. operates as a mobile application and Website that enables people to connect, share, discover, and communicate each other on mobile devices and personal computers worldwide. FB has a PE ratio of 75. Currently there are 32 analysts that rate Facebook a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Facebook has been 20.3 million shares per day over the past 30 days. Facebook has a market cap of $347.9 billion and is part of the technology sector and internet industry. The stock has a beta of 0.85 and a short float of 1.1% with 1.32 days to cover. Shares are up 15.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Facebook as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:

  • FB's very impressive revenue growth greatly exceeded the industry average of 20.5%. Since the same quarter one year prior, revenues leaped by 51.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • FB has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 12.70, which clearly demonstrates the ability to cover short-term cash needs.
  • FACEBOOK INC 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 two years. We feel that this trend should continue. During the past fiscal year, FACEBOOK INC increased its bottom line by earning $1.28 versus $1.10 in the prior year. This year, the market expects an improvement in earnings ($3.61 versus $1.28).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 194.9% when compared to the same quarter one year prior, rising from $512.00 million to $1,510.00 million.
  • The gross profit margin for FACEBOOK INC is currently very high, coming in at 94.69%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 28.05% is above that of the industry average.

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