Trade-Ideas LLC identified

MasterCard

(

MA

) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified MasterCard as such a stock due to the following factors:

  • MA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $459.2 million.
  • MA has traded 6.7 million shares today.
  • MA traded in a range 215.4% of the normal price range with a price range of $3.93.
  • MA traded below its daily resistance level (quality: 106 days, meaning that the stock is crossing a resistance level set by the last 106 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on MA:

MasterCard Incorporated, a technology company, provides transaction processing and other payment-related products and services in the United States and internationally. The stock currently has a dividend yield of 0.8%. MA has a PE ratio of 27. Currently there are 18 analysts that rate MasterCard a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for MasterCard has been 3.6 million shares per day over the past 30 days. MasterCard has a market cap of $99.4 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.33 and a short float of 0.5% with 0.96 days to cover. Shares are down 5.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates MasterCard 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 good cash flow from operations. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 7.5%. Since the same quarter one year prior, revenues slightly increased by 9.7%. 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.
  • The debt-to-equity ratio is somewhat low, currently at 0.61, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.39, which illustrates the ability to avoid short-term cash problems.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the IT Services industry and the overall market, MASTERCARD INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • MASTERCARD INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, MASTERCARD INC increased its bottom line by earning $3.35 versus $3.09 in the prior year. This year, the market expects an improvement in earnings ($3.55 versus $3.35).
  • The gross profit margin for MASTERCARD INC is rather high; currently it is at 58.99%. Regardless of MA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MA's net profit margin of 39.20% significantly outperformed against the industry.

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