Water-Logged And Getting Wetter Stock Of The Day: Virgin America (VA)
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 Virgin America as such a stock due to the following factors:
- VA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $38.2 million.
- VA has traded 301,325 shares today.
- VA traded in a range 274.4% of the normal price range with a price range of $0.73.
- VA traded below its daily resistance level (quality: 47 days, meaning that the stock is crossing a resistance level set by the last 47 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 VA:
Virgin America Inc. provides scheduled air travel services. The company has a fleet of 60 Airbus single-aisle aircraft consisting of 10 Airbus A319s and 50 Airbus A320s. As of December 31, 2015, it provided services to 23 airports in the United States and Mexico. VA has a PE ratio of 12. Currently there are no analysts that rate Virgin America a buy, 1 analyst rates it a sell, and 7 rate it a hold.
The average volume for Virgin America has been 1.1 million shares per day over the past 30 days. Virgin America has a market cap of $2.5 billion and is part of the services sector and transportation industry. Shares are up 54.2% year-to-date as of the close of trading on Friday.
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Analysis:
rates Virgin America as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 5.7%. Since the same quarter one year prior, revenues rose by 11.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The current debt-to-equity ratio, 0.45, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.25, which illustrates the ability to avoid short-term cash problems.
- VIRGIN AMERICA INC has improved earnings per share by 34.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, VIRGIN AMERICA INC increased its bottom line by earning $7.65 versus $1.06 in the prior year. For the next year, the market is expecting a contraction of 52.3% in earnings ($3.65 versus $7.65).
- The gross profit margin for VIRGIN AMERICA INC is rather low; currently it is at 20.27%. Regardless of VA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.79% trails the industry average.
- You can view the full Virgin America Ratings Report.
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