Trade-Ideas LLC identified

Healthsouth

(

HLS

) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Healthsouth as such a stock due to the following factors:

  • HLS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $25.1 million.
  • HLS has traded 113,755 shares today.
  • HLS is trading at 2.22 times the normal volume for the stock at this time of day.
  • HLS is trading at a new low 3.02% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on HLS:

HealthSouth Corporation owns and operates inpatient rehabilitation hospitals in the United States. The company provides specialized rehabilitative treatment on an inpatient and outpatient basis. The stock currently has a dividend yield of 2.1%. HLS has a PE ratio of 23. Currently there are 7 analysts that rate Healthsouth a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Healthsouth has been 778,000 shares per day over the past 30 days. Healthsouth has a market cap of $4.0 billion and is part of the health care sector and health services industry. The stock has a beta of 0.83 and a short float of 7.2% with 10.19 days to cover. Shares are up 11% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Healthsouth as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and notable return on equity. 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 6.6%. Since the same quarter one year prior, revenues rose by 26.6%. 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.
  • 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, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • HEALTHSOUTH CORP's earnings per share declined by 42.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, HEALTHSOUTH CORP reported lower earnings of $2.23 versus $2.42 in the prior year. This year, the market expects an improvement in earnings ($2.27 versus $2.23).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Health Care Providers & Services industry and the overall market, HEALTHSOUTH CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The debt-to-equity ratio is very high at 3.51 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, HLS's quick ratio is somewhat strong at 1.26, demonstrating the ability to handle short-term liquidity needs.

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