Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.
Trade-Ideas LLC identified
) 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 Oracle Corporation as such a stock due to the following factors:
- ORCL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $450.8 million.
- ORCL has traded 2.8 million shares today.
- ORCL is trading at 1.75 times the normal volume for the stock at this time of day.
- ORCL 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 ORCL:
Oracle Corporation develops, manufactures, markets, hosts, and supports database and middleware software, application software, cloud infrastructure, hardware systems, and related services worldwide. The stock currently has a dividend yield of 1.1%. ORCL has a PE ratio of 17.5. Currently there are 15 analysts that rate Oracle Corporation a buy, 2 analysts rate it a sell, and 9 rate it a hold.
The average volume for Oracle Corporation has been 15.4 million shares per day over the past 30 days. Oracle has a market cap of $185.5 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.33 and a short float of 1% with 3.05 days to cover. Shares are up 7% year-to-date as of the close of trading on Wednesday.
rates Oracle Corporation as a
. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, reasonable valuation levels, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- ORCL's revenue growth trails the industry average of 26.8%. Since the same quarter one year prior, revenues slightly increased by 2.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The gross profit margin for ORACLE CORP is currently very high, coming in at 82.31%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 25.40% is above that of the industry average.
- ORACLE 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, ORACLE CORP increased its bottom line by earning $2.39 versus $2.26 in the prior year. This year, the market expects an improvement in earnings ($3.04 versus $2.39).
- You can view the full Oracle Corporation Ratings Report.