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.

Trade-Ideas LLC identified

WellCare Health Plans

(

WCG

) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified WellCare Health Plans as such a stock due to the following factors:

  • WCG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.8 million.
  • WCG has traded 133,699 shares today.
  • WCG traded in a range 207.1% of the normal price range with a price range of $4.03.
  • WCG traded above its daily resistance level (quality: 8 days, meaning that the stock is crossing a resistance level set by the last 8 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' 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 positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on WCG:

WellCare Health Plans, Inc. provides managed care services for government-sponsored health care programs. It operates in three segments: Medicaid Health Plans, Medicare Health Plans, and Medicare PDPs. WCG has a PE ratio of 1. Currently there are 3 analysts that rate WellCare Health Plans a buy, 2 analysts rate it a sell, and 7 rate it a hold.

The average volume for WellCare Health Plans has been 365,500 shares per day over the past 30 days. WellCare Health Plans has a market cap of $3.7 billion and is part of the health care sector and health services industry. The stock has a beta of 1.44 and a short float of 5.7% with 8.60 days to cover. Shares are up 0.5% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates WellCare Health Plans as a

hold

. 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 solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • WCG's revenue growth has slightly outpaced the industry average of 13.3%. Since the same quarter one year prior, revenues rose by 16.2%. 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 current debt-to-equity ratio, 0.56, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, WCG has a quick ratio of 1.63, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Providers & Services industry. The net income has significantly decreased by 60.3% when compared to the same quarter one year ago, falling from $44.10 million to $17.50 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Providers & Services industry and the overall market, WELLCARE HEALTH PLANS INC's return on equity significantly trails that of both the industry average and the S&P 500.

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