Trade-Ideas LLC identified

Total System Services

(

TSS

) 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 Total System Services as such a stock due to the following factors:

  • TSS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $82.6 million.
  • TSS has traded 1.0 million shares today.
  • TSS is trading at 1.97 times the normal volume for the stock at this time of day.
  • TSS 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 TSS:

TheStreet Recommends

Total System Services, Inc. provides electronic payment processing services to banks and other financial institutions in the United States, Europe, Canada, Mexico, and internationally. The stock currently has a dividend yield of 0.9%. TSS has a PE ratio of 23. Currently there are 3 analysts that rate Total System Services a buy, no analysts rate it a sell, and 10 rate it a hold.

The average volume for Total System Services has been 1.7 million shares per day over the past 30 days. Total System Services has a market cap of $8.4 billion and is part of the financial sector and financial services industry. The stock has a beta of 0.98 and a short float of 2.3% with 2.55 days to cover. Shares are down 6.6% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Total System Services 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, solid stock price performance, impressive record of earnings per share growth and reasonable valuation levels. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 26.9%. Since the same quarter one year prior, revenues rose by 14.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.76, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, TSS has a quick ratio of 2.40, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Powered by its strong earnings growth of 47.72% and other important driving factors, this stock has surged by 37.87% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • TOTAL SYSTEM SERVICES INC has improved earnings per share by 47.7% 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 two years. We feel that this trend should continue. During the past fiscal year, TOTAL SYSTEM SERVICES INC increased its bottom line by earning $1.46 versus $1.27 in the prior year. This year, the market expects an improvement in earnings ($2.48 versus $1.46).

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