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 "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 Sourcefire as such a stock due to the following factors:
- FIRE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $43.5 million.
- FIRE has traded 143,111 shares today.
- FIRE traded in a range 206.4% of the normal price range with a price range of $0.36.
- FIRE traded below its daily resistance level (quality: 9 days, meaning that the stock is crossing a resistance level set by the last 9 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 FIRE:
Sourcefire, Inc. provides intelligent cybersecurity technologies worldwide. FIRE has a PE ratio of 399.2. Currently there are no analysts that rate Sourcefire a buy, no analysts rate it a sell, and 12 rate it a hold.
The average volume for Sourcefire has been 756,000 shares per day over the past 30 days. Sourcefire has a market cap of $2.4 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.08 and a short float of 5.4% with 2.51 days to cover. Shares are up 60.6% year to date as of the close of trading on Friday.
rates Sourcefire as a
. 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 good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and premium valuation.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 28.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- FIRE has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.76, which clearly demonstrates the ability to cover short-term cash needs.
- Powered by its strong earnings growth of 75.00% and other important driving factors, this stock has surged by 50.34% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Software industry and the overall market, SOURCEFIRE INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Sourcefire Ratings Report.