Trade-Ideas LLC identified

Healthsouth

(

HLS

) 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 Healthsouth as such a stock due to the following factors:

  • HLS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $41.0 million.
  • HLS has traded 293,571 shares today.
  • HLS traded in a range 263.8% of the normal price range with a price range of $3.90.
  • HLS traded above its daily resistance level (quality: 6 days, meaning that the stock is crossing a resistance level set by the last 6 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 HLS:

HealthSouth Corporation owns and operates inpatient rehabilitation hospitals in the United States. The company provides specialized rehabilitative treatment on an inpatient and outpatient basis. The stock currently has a dividend yield of 2.6%. HLS has a PE ratio of 19. Currently there are 6 analysts that rate Healthsouth a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Healthsouth has been 773,100 shares per day over the past 30 days. Healthsouth has a market cap of $3.3 billion and is part of the health care sector and health services industry. The stock has a beta of 1.01 and a short float of 6.6% with 5.09 days to cover. Shares are down 5.6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Healthsouth as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 10.2%. Since the same quarter one year prior, revenues rose by 26.6%. 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.
  • HEALTHSOUTH CORP's earnings per share declined by 42.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, HEALTHSOUTH CORP reported lower earnings of $2.23 versus $2.42 in the prior year. This year, the market expects an improvement in earnings ($2.25 versus $2.23).
  • 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 Health Care Providers & Services industry and the overall market, HEALTHSOUTH CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The debt-to-equity ratio is very high at 3.51 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, HLS's quick ratio is somewhat strong at 1.26, demonstrating the ability to handle short-term liquidity needs.
  • The gross profit margin for HEALTHSOUTH CORP is rather low; currently it is at 23.15%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 5.69% is above that of the industry average.

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