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 Radian Group ( RDN) 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 Radian Group as such a stock due to the following factors:
- RDN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $65.5 million.
- RDN has traded 2.1 million shares today.
- RDN traded in a range 224.1% of the normal price range with a price range of $1.15.
- RDN traded below its daily resistance level (quality: 6 days, meaning that the stock is crossing a resistance level set by the last 6 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 RDN with the Ticky from Trade-Ideas. See the FREE profile for RDN NOW at Trade-Ideas More details on RDN: Radian Group Inc., through its subsidiaries, operates as a credit enhancement company in the United States. The company operates in two segments, Mortgage Insurance and Financial Guaranty. The stock currently has a dividend yield of 0.1%. Currently there are 4 analysts that rate Radian Group a buy, no analysts rate it a sell, and 1 rates it a hold. The average volume for Radian Group has been 5.9 million shares per day over the past 30 days. Radian Group has a market cap of $2.3 billion and is part of the financial sector and insurance industry. The stock has a beta of 2.79 and a short float of 27.4% with 9.79 days to cover. Shares are up 122.9% year to date as of the close of trading on Tuesday. 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 Radian Group as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins. Highlights from the ratings report include:
- Powered by its strong earnings growth of 78.88% and other important driving factors, this stock has surged by 278.51% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- The revenue growth significantly trails the industry average of 106.3%. Since the same quarter one year prior, revenues rose by 33.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- RADIAN GROUP INC reported significant earnings per share improvement 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, RADIAN GROUP INC swung to a loss, reporting -$3.41 versus $2.25 in the prior year. This year, the market expects an improvement in earnings (-$1.47 versus -$3.41).
- The gross profit margin for RADIAN GROUP INC is currently extremely low, coming in at 4.28%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, RDN's net profit margin of -16.54% significantly underperformed when compared to the industry average.
- 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 Thrifts & Mortgage Finance industry and the overall market, RADIAN GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Radian Group 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.