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.

Trade-Ideas LLC identified

Tenet Healthcare

(

THC

) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Tenet Healthcare as such a stock due to the following factors:

  • THC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $75.2 million.
  • THC has traded 436,056 shares today.
  • THC traded in a range 221.7% of the normal price range with a price range of $2.57.
  • THC traded above its daily resistance level (quality: 2 days, meaning that the stock is crossing a resistance level set by the last 2 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' 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 positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on THC:

Tenet Healthcare Corporation, a healthcare services company, primarily operates acute care hospitals and related healthcare facilities in the United States. It operates through two segments, Hospital Operations and Other, and Conifer. THC has a PE ratio of 48. Currently there are 9 analysts that rate Tenet Healthcare a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Tenet Healthcare has been 1.5 million shares per day over the past 30 days. Tenet Healthcare has a market cap of $5.1 billion and is part of the health care sector and health services industry. The stock has a beta of 1.33 and a short float of 8.1% with 4.07 days to cover. Shares are up 1.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Tenet Healthcare as a

hold

. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:

  • TENET HEALTHCARE CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, TENET HEALTHCARE CORP turned its bottom line around by earning $0.32 versus -$1.20 in the prior year. This year, the market expects an improvement in earnings ($2.23 versus $0.32).
  • 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 246.9% when compared to the same quarter one year prior, rising from -$32.00 million to $47.00 million.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • Net operating cash flow has significantly decreased to -$57.00 million or 200.00% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The debt-to-equity ratio is very high at 14.70 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, THC maintains a poor quick ratio of 0.71, which illustrates the inability to avoid short-term cash problems.

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