Trade-Ideas LLC identified

Humana

(

HUM

) 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 Humana as such a stock due to the following factors:

  • HUM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $155.6 million.
  • HUM has traded 514,889 shares today.
  • HUM traded in a range 274.1% of the normal price range with a price range of $8.13.
  • HUM traded below its daily resistance level (quality: 11 days, meaning that the stock is crossing a resistance level set by the last 11 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 HUM:

Humana Inc., together with its subsidiaries, operates as a health and well-being company. The company operates through three segments: Retail, Group, and Healthcare Services. The stock currently has a dividend yield of 0.7%. HUM has a PE ratio of 2. Currently there are 7 analysts that rate Humana a buy, no analysts rate it a sell, and 9 rate it a hold.

The average volume for Humana has been 1.1 million shares per day over the past 30 days. Humana has a market cap of $26.1 billion and is part of the health care sector and health services industry. The stock has a beta of 0.87 and a short float of 1.6% with 2.70 days to cover. Shares are up 22.6% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Humana as a

buy

. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and growth in earnings per share. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Health Care Providers & Services industry average. The net income increased by 8.3% when compared to the same quarter one year prior, going from $290.00 million to $314.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.2%. Since the same quarter one year prior, revenues slightly increased by 9.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.37, 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 1.29, which illustrates the ability to avoid short-term cash problems.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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.
  • HUMANA INC has improved earnings per share by 13.0% 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, HUMANA INC reported lower earnings of $7.33 versus $7.70 in the prior year. This year, the market expects an improvement in earnings ($7.75 versus $7.33).

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