Trade-Ideas LLC identified

Moody's Corporation

(

MCO

) 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 Moody's Corporation as such a stock due to the following factors:

  • MCO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $73.0 million.
  • MCO has traded 877,738 shares today.
  • MCO traded in a range 224% of the normal price range with a price range of $3.59.
  • MCO traded below its daily resistance level (quality: 27 days, meaning that the stock is crossing a resistance level set by the last 27 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 MCO:

TST Recommends

Moody's Corporation provides credit ratings; and credit, capital markets, and economic related research, data, and analytical tools worldwide. The company operates through Moody's Investors Service and Moody's Analytics segments. The stock currently has a dividend yield of 1.4%. MCO has a PE ratio of 22. Currently there are 5 analysts that rate Moody's Corporation a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Moody's Corporation has been 917,500 shares per day over the past 30 days. Moody's has a market cap of $19.9 billion and is part of the services sector and diversified services industry. The stock has a beta of 1.43 and a short float of 3.6% with 8.44 days to cover. Shares are up 6% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Moody's Corporation as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, 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:

  • MCO's revenue growth has slightly outpaced the industry average of 3.2%. Since the same quarter one year prior, revenues slightly increased by 5.1%. 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.
  • Net operating cash flow has increased to $332.60 million or 18.44% when compared to the same quarter last year. In addition, MOODY'S CORP has also modestly surpassed the industry average cash flow growth rate of 15.56%.
  • The gross profit margin for MOODY'S CORP is currently very high, coming in at 73.43%. Regardless of MCO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MCO's net profit margin of 28.50% significantly outperformed against the industry.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
  • MOODY'S CORP's earnings per share declined by 13.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MOODY'S CORP increased its bottom line by earning $4.60 versus $3.60 in the prior year. This year, the market expects an improvement in earnings ($4.61 versus $4.60).

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