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 or Stephanie Link.
Trade-Ideas LLC identified
) 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 Facebook Inc Class A as such a stock due to the following factors:
- FB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.2 billion.
- FB has traded 33.5 million shares today.
- FB traded in a range 327.7% of the normal price range with a price range of $5.85.
- FB traded below its daily resistance level (quality: 105 days, meaning that the stock is crossing a resistance level set by the last 105 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 FB:
Facebook, Inc. operates as a social networking company worldwide. It provides a set of development tools and application programming interfaces that enable developers to integrate with Facebook to create mobile and Web applications. FB has a PE ratio of 71.2. Currently there are 28 analysts that rate Facebook Inc Class A a buy, no analysts rate it a sell, and 2 rate it a hold.
The average volume for Facebook Inc Class A has been 24.7 million shares per day over the past 30 days. Facebook Inc Class A has a market cap of $169.6 billion and is part of the technology sector and internet industry. The stock has a beta of 0.74 and a short float of 1.5% with 1.01 days to cover. Shares are down 0% year-to-date as of the close of trading on Thursday.
rates Facebook Inc Class A as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 29.1%. Since the same quarter one year prior, revenues rose by 48.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- FB's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 9.04, which clearly demonstrates the ability to cover short-term cash needs.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 38.26% over the past year, a rise that has exceeded that of the S&P 500 Index. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- 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. When compared to other companies in the Internet Software & Services industry and the overall market, FACEBOOK INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Facebook Inc Class A Ratings Report.