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 AmTrust Financial Services ( AFSI) 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 AmTrust Financial Services as such a stock due to the following factors:
- AFSI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $55.8 million.
- AFSI has traded 4.4 million shares today.
- AFSI traded in a range 226.7% of the normal price range with a price range of $4.24.
- AFSI traded below its daily resistance level (quality: 208 days, meaning that the stock is crossing a resistance level set by the last 208 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 AFSI with the Ticky from Trade-Ideas. See the FREE profile for AFSI NOW at Trade-Ideas More details on AFSI: AmTrust Financial Services, Inc., through its subsidiaries, underwrites and provides property and casualty insurance in the United States and internationally. Currently there are 3 analysts that rate AmTrust Financial Services a buy, no analysts rate it a sell, and 2 rate it a hold. The average volume for AmTrust Financial Services has been 656,200 shares per day over the past 30 days. AmTrust Financial Services has a market cap of $2.6 billion and is part of the financial sector and insurance industry. The stock has a beta of 0.74 and a short float of 29.1% with 4.68 days to cover. 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 AmTrust Financial Services as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, notable return on equity 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:
- AFSI's very impressive revenue growth greatly exceeded the industry average of 9.0%. Since the same quarter one year prior, revenues leaped by 57.5%. 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 30.78% 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, AFSI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- AMTRUST FINANCIAL SERVICES has improved earnings per share by 23.3% 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, AMTRUST FINANCIAL SERVICES increased its bottom line by earning $2.37 versus $2.27 in the prior year. This year, the market expects an improvement in earnings ($3.10 versus $2.37).
- 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. In comparison to the other companies in the Insurance industry and the overall market, AMTRUST FINANCIAL SERVICES's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- AFSI's debt-to-equity ratio of 0.67 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further.
- You can view the full AmTrust Financial Services 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.