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

Ultimate Software Group

(

ULTI

) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Ultimate Software Group as such a stock due to the following factors:

  • ULTI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $44.5 million.
  • ULTI has traded 130.1490000000000009094947017729282379150390625 options contracts today.
  • ULTI is making at least a new 3-day high.
  • ULTI has a PE ratio of 121.
  • ULTI is mentioned 1.42 times per day on StockTwits.
  • ULTI has not yet been mentioned on StockTwits today.
  • ULTI is currently in the upper 20% of its 1-year range.
  • ULTI is in the upper 35% of its 20-day range.
  • ULTI is in the upper 45% of its 5-day range.
  • ULTI is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

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More details on ULTI:

The Ultimate Software Group, Inc. provides cloud-based human capital management solutions primarily to enterprise companies in the United States. Its UltiPro software solution delivers the functionality businesses to manage the employee life cycle from recruitment to retirement. ULTI has a PE ratio of 121. Currently there are 9 analysts that rate Ultimate Software Group a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Ultimate Software Group has been 300,100 shares per day over the past 30 days. Ultimate Software Group has a market cap of $4.9 billion and is part of the technology sector and internet industry. The stock has a beta of 0.97 and a short float of 7.5% with 8.60 days to cover. Shares are up 16.3% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Ultimate Software Group as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. 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 greatly exceeded the industry average of 11.5%. Since the same quarter one year prior, revenues rose by 19.6%. 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 return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Software industry and the overall market, ULTIMATE SOFTWARE GROUP INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for ULTIMATE SOFTWARE GROUP INC is rather high; currently it is at 64.02%. It has increased from the same quarter the previous year.
  • Net operating cash flow has slightly increased to $26.06 million or 1.85% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -29.04%.
  • ULTI's debt-to-equity ratio is very low at 0.04 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.22 is very weak and demonstrates a lack of ability to pay short-term obligations.

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