Trade-Ideas LLC identified

Centene

(

CNC

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

  • CNC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $203.0 million.
  • CNC has traded 2.6 million shares today.
  • CNC is trading at 1.92 times the normal volume for the stock at this time of day.
  • CNC crossed above its 200-day simple moving average.

'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. 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 on. 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 CNC:

Centene Corporation operates as a diversified and multi-national healthcare enterprise that provides programs and services to under-insured and uninsured individuals in the United States. It operates through two segments, Managed Care and Specialty Services. CNC has a PE ratio of 2. Currently there are 10 analysts that rate Centene a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Centene has been 2.2 million shares per day over the past 30 days. Centene has a market cap of $7.8 billion and is part of the health care sector and health services industry. The stock has a beta of 0.73 and a short float of 14.4% with 5.33 days to cover. Shares are down 5.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Centene as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, notable return on equity, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 11.5%. Since the same quarter one year prior, revenues rose by 33.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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 Health Care Providers & Services industry and the overall market, CENTENE CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Health Care Providers & Services industry average. The net income increased by 4.2% when compared to the same quarter one year prior, going from $106.53 million to $111.00 million.
  • CENTENE CORP's earnings per share improvement from the most recent quarter was slightly positive. 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, CENTENE CORP increased its bottom line by earning $2.90 versus $2.22 in the prior year. This year, the market expects an improvement in earnings ($4.21 versus $2.90).
  • The current debt-to-equity ratio, 0.57, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.89 is somewhat weak and could be cause for future problems.

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