Trade-Ideas: Morgan Stanley (MS) Is Today's

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 Morgan Stanley ( MS) 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 Morgan Stanley as such a stock due to the following factors:

  • MS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $432.1 million.
  • MS has traded 9.2 million shares today.
  • MS traded in a range 345.5% of the normal price range with a price range of $2.20.
  • MS traded below its daily resistance level (quality: 76 days, meaning that the stock is crossing a resistance level set by the last 76 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.

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More details on MS:

Morgan Stanley, a financial holding company, provides various financial products and services to corporations, governments, financial institutions, and individuals worldwide. The stock currently has a dividend yield of 0.7%. MS has a PE ratio of 38.3. Currently there are 13 analysts that rate Morgan Stanley a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Morgan Stanley has been 13.7 million shares per day over the past 30 days. Morgan Stanley has a market cap of $53.3 billion and is part of the financial sector and financial services industry. The stock has a beta of 2.48 and a short float of 1.6% with 1.55 days to cover. Shares are up 42.4% 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 Morgan Stanley as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and increase in net income. 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:
  • MS's revenue growth has slightly outpaced the industry average of 12.3%. Since the same quarter one year prior, revenues rose by 15.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Capital Markets industry average. The net income increased by 65.8% when compared to the same quarter one year prior, rising from $591.00 million to $980.00 million.
  • MORGAN STANLEY 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, MORGAN STANLEY reported lower earnings of $0.00 versus $1.16 in the prior year. This year, the market expects an increase in earnings to $2.05 from $0.00.
  • The gross profit margin for MORGAN STANLEY is currently lower than what is desirable, coming in at 34.03%. Regardless of MS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 10.08% trails the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, MORGAN STANLEY underperformed against that of the industry average and is significantly less than that of the S&P 500.

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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