Trade-Ideas LLC identified

Health Net

(

HNT

) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Health Net as such a stock due to the following factors:

  • HNT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $48.1 million.
  • HNT has traded 99,726 shares today.
  • HNT is up 3.3% today.
  • HNT was down 5.1% yesterday.

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More details on HNT:

Health Net, Inc. provides managed health care services through health plans and government-sponsored managed care plans in the United States. It operates through Western Region Operations and Government Contracts segments. HNT has a PE ratio of 33. Currently there are 2 analysts that rate Health Net a buy, 1 analyst rates it a sell, and 7 rate it a hold.

TheStreet Recommends

The average volume for Health Net has been 859,000 shares per day over the past 30 days. Health Net 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 0.62 and a short float of 1.5% with 1.44 days to cover. Shares are up 14% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Health Net 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 has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • 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 774.0% when compared to the same quarter one year prior, rising from -$8.94 million to $60.25 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 9.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.34, 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 1.38, which illustrates the ability to avoid short-term cash problems.
  • Powered by its strong earnings growth of 800.00% and other important driving factors, this stock has surged by 27.23% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • HEALTH NET INC reported significant earnings per share improvement 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, HEALTH NET INC reported lower earnings of $1.80 versus $2.12 in the prior year. This year, the market expects an improvement in earnings ($3.33 versus $1.80).

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