Trade-Ideas LLC identified

SolarWinds

(

SWI

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

  • SWI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $40.0 million.
  • SWI has traded 310,942 shares today.
  • SWI traded in a range 225.4% of the normal price range with a price range of $1.07.
  • SWI traded below its daily resistance level (quality: 54 days, meaning that the stock is crossing a resistance level set by the last 54 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in SWI with the Ticky from Trade-Ideas. See the FREE profile for SWI NOW at Trade-Ideas

More details on SWI:

SolarWinds, Inc., together with its subsidiaries, designs, develops, markets, sells, and supports enterprise-class information technology (IT) and infrastructure management software to IT and DevOps professionals in various organizations worldwide. SWI has a PE ratio of 49. Currently there are no analysts that rate SolarWinds a buy, no analysts rate it a sell, and 10 rate it a hold.

The average volume for SolarWinds has been 1.0 million shares per day over the past 30 days. SolarWinds has a market cap of $4.2 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.35 and a short float of 1.1% with 1.01 days to cover. Shares are up 16.1% year-to-date as of the close of trading on Friday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates SolarWinds as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and notable return on equity. However, as a counter to these strengths, we find that the stock itself is trading at a premium valuation.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 15.5%. Since the same quarter one year prior, revenues rose by 16.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • SOLARWINDS INC has improved earnings per share by 12.5% 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, SOLARWINDS INC reported lower earnings of $1.03 versus $1.18 in the prior year. This year, the market expects an improvement in earnings ($2.10 versus $1.03).
  • The gross profit margin for SOLARWINDS INC is currently very high, coming in at 96.79%. Regardless of SWI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 20.52% trails the industry average.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.