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 "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified WellPoint as such a stock due to the following factors:
- WLP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $287.3 million.
- WLP has traded 168,938 shares today.
- WLP is trading at 1.60 times the normal volume for the stock at this time of day.
- WLP crossed below its 200-day simple moving average.
'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.
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More details on WLP:
WellPoint, Inc., a health benefits company, through its subsidiaries, offers network-based managed care plans to large and small employer, individual, Medicaid, and senior markets in the United States. The company operates through three segments: Commercial, Consumer, and Other. The stock currently has a dividend yield of 2%. WLP has a PE ratio of 104.1. Currently there are 6 analysts that rate WellPoint a buy, no analysts rate it a sell, and 10 rate it a hold.
The average volume for WellPoint has been 2.4 million shares per day over the past 30 days. WellPoint has a market cap of $25.2 billion and is part of the health care sector and health services industry. The stock has a beta of 0.58 and a short float of 1.9% with 1.71 days to cover. Shares are down 7.3% year-to-date as of the close of trading on Wednesday.
rates WellPoint 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, reasonable valuation levels and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- WLP's revenue growth has slightly outpaced the industry average of 11.4%. Since the same quarter one year prior, revenues rose by 15.2%. 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, 0.59, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, WLP has a quick ratio of 1.64, which demonstrates the ability of the company to cover short-term liquidity needs.
- Compared to its closing price of one year ago, WLP's share price has jumped by 34.21%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, WLP should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- WELLPOINT INC's earnings per share declined by 32.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, WELLPOINT INC increased its bottom line by earning $8.65 versus $8.13 in the prior year. For the next year, the market is expecting a contraction of 3.2% in earnings ($8.37 versus $8.65).
- You can view the full WellPoint Ratings Report.