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 Tenet Healthcare ( THC) 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 Tenet Healthcare as such a stock due to the following factors:

  • THC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $43.8 million.
  • THC has traded 1.3 million shares today.
  • THC traded in a range 220.3% of the normal price range with a price range of $1.89.
  • THC traded below its daily resistance level (quality: 21 days, meaning that the stock is crossing a resistance level set by the last 21 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 THC:

Tenet Healthcare Corporation, an investor-owned health care services company, owns and operates acute care hospitals, ambulatory surgery centers, diagnostic imaging centers, urgent care centers, and related health care facilities in the United States. Currently there are 8 analysts that rate Tenet Healthcare a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Tenet Healthcare has been 1.8 million shares per day over the past 30 days. Tenet Healthcare has a market cap of $4.2 billion and is part of the health care sector and health services industry. The stock has a beta of 2.47 and a short float of 7% with 6.22 days to cover. Shares are up 31.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Tenet Healthcare as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share and revenue growth. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.6%. Since the same quarter one year prior, revenues slightly increased by 8.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving 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 47.49% over the past year, a rise that has exceeded that of the S&P 500 Index. Although THC had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • Net operating cash flow has significantly increased by 51.47% to $206.00 million when compared to the same quarter last year. Despite an increase in cash flow of 51.47%, TENET HEALTHCARE CORP is still growing at a significantly lower rate than the industry average of 324.99%.
  • 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 Health Care Providers & Services industry and the overall market, TENET HEALTHCARE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for TENET HEALTHCARE CORP is currently extremely low, coming in at 11.96%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.16% trails that of the industry average.

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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