Water-Logged And Getting Wetter: Laboratory Corporation Of America Holdings (LH)

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 Laboratory Corporation of America Holdings ( LH) 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 Laboratory Corporation of America Holdings as such a stock due to the following factors:

  • LH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $62.8 million.
  • LH has traded 31,842 shares today.
  • LH traded in a range 201.5% of the normal price range with a price range of $3.12.
  • LH traded below its daily resistance level (quality: 19 days, meaning that the stock is crossing a resistance level set by the last 19 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 LH:

Laboratory Corporation of America Holdings operates as an independent clinical laboratory company worldwide. LH has a PE ratio of 17.4. Currently there are 3 analysts that rate Laboratory Corporation of America Holdings a buy, 2 analysts rate it a sell, and 12 rate it a hold.

The average volume for Laboratory Corporation of America Holdings has been 636,800 shares per day over the past 30 days. Laboratory Corporation of America has a market cap of $9.3 billion and is part of the health care sector and health services industry. The stock has a beta of 0.83 and a short float of 9.2% with 14.80 days to cover. Shares are up 21.3% year to date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Laboratory Corporation of America Holdings as a buy. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, growth in earnings per share, revenue growth, notable return on equity and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • Compared to where it was 12 months ago, this stock has enjoyed a nice rise of 26.37% which was in line with the performance of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, LH should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • LABORATORY CP OF AMER HLDGS has improved earnings per share by 6.5% 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, LABORATORY CP OF AMER HLDGS increased its bottom line by earning $5.98 versus $5.08 in the prior year. This year, the market expects an improvement in earnings ($7.03 versus $5.98).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.8%. Since the same quarter one year prior, revenues slightly increased by 3.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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. Compared to other companies in the Health Care Providers & Services industry and the overall market, LABORATORY CP OF AMER HLDGS's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $234.20 million or 14.91% when compared to the same quarter last year. Despite an increase in cash flow of 14.91%, LABORATORY CP OF AMER HLDGS is still growing at a significantly lower rate than the industry average of 326.97%.

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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