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Trade-Ideas LLC identified

Priceline Group

(

PCLN

) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Priceline Group as such a stock due to the following factors:

  • PCLN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $983.7 million.
  • PCLN has traded 277,561 shares today.
  • PCLN is trading at 2.90 times the normal volume for the stock at this time of day.
  • PCLN crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on PCLN:

TheStreet Recommends

The Priceline Group Inc. provides online travel and travel related reservation and search services. PCLN has a PE ratio of 27. Currently there are 12 analysts that rate Priceline Group a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Priceline Group has been 687,800 shares per day over the past 30 days. Priceline Group has a market cap of $63.8 billion and is part of the services sector and diversified services industry. The stock has a beta of 1.47 and a short float of 2.4% with 1.58 days to cover. Shares are up 10.9% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Priceline Group as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and solid stock price performance. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • PCLN's revenue growth trails the industry average of 38.3%. Since the same quarter one year prior, revenues slightly increased by 9.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.64, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, PCLN has a quick ratio of 2.49, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Internet & Catalog Retail industry and the overall market, PRICELINE GROUP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for PRICELINE GROUP INC is currently very high, coming in at 94.54%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 38.56% significantly outperformed against the industry average.
  • 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. 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.

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