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 LinkedIn ( LNKD) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified LinkedIn as such a stock due to the following factors:
- LNKD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $387.2 million.
- LNKD has a PE ratio of 659.4.
- LNKD is currently in the upper 30% of its 1-year range.
- LNKD is in the upper 25% of its 20-day range.
- LNKD is in the upper 35% of its 5-day range.
- LNKD is currently trading above yesterday's high.
- LNKD has experienced a gap between today's open and yesterday's close of 0.6%.
'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills. EXCLUSIVE OFFER: Get the inside scoop on opportunities in LNKD with the Ticky from Trade-Ideas. See the FREE profile for LNKD NOW at Trade-Ideas More details on LNKD: LinkedIn Corporation operates an online professional network. LNKD has a PE ratio of 659.4. Currently there are 17 analysts that rate LinkedIn a buy, no analysts rate it a sell, and 11 rate it a hold. The average volume for LinkedIn has been 1.9 million shares per day over the past 30 days. LinkedIn has a market cap of $21.7 billion and is part of the technology sector and internet industry. The stock has a beta of 1.81 and a short float of 4% with 2.21 days to cover. Shares are up 101% year to date as of the close of trading on Thursday. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more. TheStreetRatings.com Analysis: TheStreet Quant Ratings rates LinkedIn as a sell. Among the areas we feel are negative, one of the most important has been premium valuation based on our review of its current price compared to such things as earnings and book value. Highlights from the ratings report include:
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Internet Software & Services industry and the overall market, LINKEDIN CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for LINKEDIN CORP is currently very high, coming in at 86.45%. Regardless of LNKD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LNKD's net profit margin of 1.02% is significantly lower than the industry average.
- Compared to its closing price of one year ago, LNKD's share price has jumped by 123.31%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- LINKEDIN CORP reported flat earnings per share in the most recent quarter. 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, LINKEDIN CORP increased its bottom line by earning $0.19 versus $0.11 in the prior year. This year, the market expects an improvement in earnings ($1.53 versus $0.19).
- You can view the full LinkedIn Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.