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 Nationstar Mortgage Holdings ( NSM) 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 Nationstar Mortgage Holdings as such a stock due to the following factors:
- NSM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $39.8 million.
- NSM has traded 873,302 shares today.
- NSM traded in a range 201.7% of the normal price range with a price range of $2.69.
- NSM traded below its daily resistance level (quality: 31 days, meaning that the stock is crossing a resistance level set by the last 31 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 NSM with the Ticky from Trade-Ideas. See the FREE profile for NSM NOW at Trade-Ideas More details on NSM: Nationstar Mortgage Holdings Inc. operates as a residential mortgage loan servicer in the United States. It operates in two segments, Servicing and Originations. NSM has a PE ratio of 11.2. Currently there are 3 analysts that rate Nationstar Mortgage Holdings a buy, no analysts rate it a sell, and 5 rate it a hold. The average volume for Nationstar Mortgage Holdings has been 1.2 million shares per day over the past 30 days. Nationstar has a market cap of $3.7 billion and is part of the financial sector and real estate industry. The stock has a beta of -0.87 and a short float of 39.6% with 7.79 days to cover. Shares are up 28.1% year-to-date as of the close of trading on Thursday. 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 Nationstar Mortgage Holdings as a sell. Among the areas we feel are negative, one of the most important has been weak operating cash flow. Highlights from the ratings report include:
- Net operating cash flow has decreased to -$292.23 million or 11.00% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Thrifts & Mortgage Finance industry average, but is greater than that of the S&P 500. The net income increased by 48.7% when compared to the same quarter one year prior, rising from $55.07 million to $81.89 million.
- 44.11% is the gross profit margin for NATIONSTAR MORTGAGE HOLDINGS which we consider to be strong. Regardless of NSM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NSM's net profit margin of 11.76% is significantly lower than the industry average.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Thrifts & Mortgage Finance industry and the overall market, NATIONSTAR MORTGAGE HOLDINGS's return on equity significantly exceeds that of both the industry average and the S&P 500.
- This stock has increased by 32.98% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in NSM do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
- You can view the full Nationstar Mortgage Holdings 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.