Trade-Ideas: CVS Caremark (CVS) Is Today's Unusual Social Activity Stock

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 CVS Caremark ( CVS) as an unusual social activity candidate. In addition to specific proprietary factors, Trade-Ideas identified CVS Caremark as such a stock due to the following factors:

  • CVS has 15x the normal benchmarked social activity for this time of the day compared to its average of 1.00 mentions/day.
  • CVS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $265.8 million.

Identifying stocks with 'Unusual Social Activity' tends to be a valuable process for traders looking to capitalize on the 'talk of the town' stocks that are basking in far more attention from the StockTwits financial community than normal. Good press? Bad press? It ultimately doesn't matter if it's good or bad if you know how to trade around the sentiment. Certain hedge funds use such data for their proprietary algorithms and it is not uncommon to see shared social sentiment play itself out in a stock's price trend.

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More details on CVS:

CVS Caremark Corporation, together with its subsidiaries, provides integrated pharmacy health care services in the United States. The stock currently has a dividend yield of 1.5%. CVS has a PE ratio of 17.7. Currently there are 12 analysts that rate CVS Caremark a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for CVS Caremark has been 4.5 million shares per day over the past 30 days. CVS Caremark has a market cap of $73.2 billion and is part of the services sector and retail industry. The stock has a beta of 0.89 and a short float of 0.7% with 1.95 days to cover. Shares are up 23.3% year to date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates CVS Caremark as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, increase in net income and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • CVS's revenue growth has slightly outpaced the industry average of 2.7%. Since the same quarter one year prior, revenues slightly increased by 1.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 28.39% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CVS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • CVS CAREMARK CORP has improved earnings per share by 21.3% 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 two years. We feel that this trend should continue. During the past fiscal year, CVS CAREMARK CORP increased its bottom line by earning $3.04 versus $2.61 in the prior year. This year, the market expects an improvement in earnings ($3.96 versus $3.04).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Food & Staples Retailing industry average. The net income increased by 16.0% when compared to the same quarter one year prior, going from $966.00 million to $1,121.00 million.
  • CVS's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that CVS's debt-to-equity ratio is low, the quick ratio, which is currently 0.65, displays a potential problem in covering short-term cash needs.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
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