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Trade-Ideas LLC identified

JD.com

(

JD

) 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 JD.com as such a stock due to the following factors:

  • JD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $392.4 million.
  • JD has traded 15.7 million shares today.
  • JD is trading at 1.53 times the normal volume for the stock at this time of day.
  • JD 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 JD:

TheStreet Recommends

JD.com, Inc., through its subsidiaries, operates as an online direct sales company in the People's Republic of China. It primarily offers electronics and home appliances products; and general merchandise products, including audio and video products, and books. JD has a PE ratio of 11. Currently there are 5 analysts that rate JD.com a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for JD.com has been 12.3 million shares per day over the past 30 days. JD.com has a market cap of $41.0 billion and is part of the technology sector and internet industry. Shares are up 29.4% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates JD.com as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and poor profit margins.

Highlights from the ratings report include:

  • JD's revenue growth has slightly outpaced the industry average of 37.9%. Since the same quarter one year prior, revenues rose by 46.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • JD's debt-to-equity ratio is very low at 0.09 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • Compared to other companies in the Internet & Catalog Retail industry and the overall market, JD.COM INC -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for JD.COM INC -ADR is currently extremely low, coming in at 7.44%. Regardless of JD's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -1.20% trails the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet & Catalog Retail industry. The net income has significantly decreased by 211.9% when compared to the same quarter one year ago, falling from -$26.78 million to -$83.52 million.

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