Trade-Ideas LLC identified

Acadia Healthcare

(

ACHC

) 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 Acadia Healthcare as such a stock due to the following factors:

  • ACHC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $68.4 million.
  • ACHC has traded 464,871 shares today.
  • ACHC is trading at 1.63 times the normal volume for the stock at this time of day.
  • ACHC 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 ACHC:

TheStreet Recommends

Acadia Healthcare Company, Inc. ACHC has a PE ratio of 45. Currently there are 10 analysts that rate Acadia Healthcare a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Acadia Healthcare has been 775,400 shares per day over the past 30 days. Acadia Healthcare has a market cap of $5.0 billion and is part of the health care sector and health services industry. The stock has a beta of 1.18 and a short float of 6.6% with 2.76 days to cover. Shares are up 14.6% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Acadia Healthcare as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, growth in earnings per share, compelling growth in net income and solid stock price performance. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:

  • ACHC's very impressive revenue growth greatly exceeded the industry average of 6.5%. Since the same quarter one year prior, revenues leaped by 112.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ACADIA HEALTHCARE CO INC has improved earnings per share by 13.9% 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, ACADIA HEALTHCARE CO INC increased its bottom line by earning $1.49 versus $0.86 in the prior year. This year, the market expects an improvement in earnings ($2.18 versus $1.49).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 50.7% when compared to the same quarter one year prior, rising from $22.45 million to $33.84 million.
  • Net operating cash flow has significantly increased by 233.06% to $72.92 million when compared to the same quarter last year. In addition, ACADIA HEALTHCARE CO INC has also vastly surpassed the industry average cash flow growth rate of 14.57%.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 51.96% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

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