Trade-Ideas LLC identified

Radian Group

(

RDN

) 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 Radian Group as such a stock due to the following factors:

  • RDN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $36.0 million.
  • RDN has traded 2.6 million shares today.
  • RDN traded in a range 223.4% of the normal price range with a price range of $0.82.
  • RDN traded below its daily resistance level (quality: 375 days, meaning that the stock is crossing a resistance level set by the last 375 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 RDN:

Radian Group Inc., through its subsidiaries, provides mortgage and real estate products and services in the United States. It operates through two segments, Mortgage Insurance, and Mortgage and Real Estate Services (MRES). The stock currently has a dividend yield of 0.1%. RDN has a PE ratio of 3. Currently there are 4 analysts that rate Radian Group a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Radian Group has been 1.9 million shares per day over the past 30 days. Radian Group has a market cap of $3.3 billion and is part of the financial sector and insurance industry. The stock has a beta of 1.44 and a short float of 11% with 8.69 days to cover. Shares are down 4.4% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Radian Group as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, good cash flow from operations, expanding profit margins and increase in stock price during the past year. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 10.0%. Since the same quarter one year prior, revenues rose by 33.6%. 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 company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Thrifts & Mortgage Finance industry and the overall market, RADIAN GROUP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 54.44% to -$56.48 million when compared to the same quarter last year. In addition, RADIAN GROUP INC has also vastly surpassed the industry average cash flow growth rate of -139.24%.
  • The gross profit margin for RADIAN GROUP INC is rather high; currently it is at 64.79%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, RDN's net profit margin of 15.14% significantly trails the industry average.
  • After a year of stock price fluctuations, the net result is that RDN's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

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