WellCare Health Plans (WCG) Marked As A Barbarian At The Gate

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 WellCare Health Plans ( WCG) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified WellCare Health Plans as such a stock due to the following factors:

  • WCG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.8 million.
  • WCG has traded 134,755 shares today.
  • WCG traded in a range 205.7% of the normal price range with a price range of $2.60.
  • WCG traded above its daily resistance level (quality: 27 days, meaning that the stock is crossing a resistance level set by the last 27 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' 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 positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on WCG:

WellCare Health Plans, Inc. provides managed care services for government-sponsored health care programs in the United States. WCG has a PE ratio of 16.9. Currently there are 5 analysts that rate WellCare Health Plans a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for WellCare Health Plans has been 537,000 shares per day over the past 30 days. WellCare Health Plans has a market cap of $3.0 billion and is part of the health care sector and health services industry. The stock has a beta of 1.47 and a short float of 5.4% with 6.49 days to cover. Shares are down 2.1% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates WellCare Health Plans as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 9.3%. Since the same quarter one year prior, revenues rose by 37.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • WCG's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, WCG has a quick ratio of 1.84, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Powered by its strong earnings growth of 66.66% and other important driving factors, this stock has surged by 42.20% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, WCG should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 67.1% when compared to the same quarter one year prior, rising from $38.29 million to $63.99 million.

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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