Trade-Ideas: Wells Fargo (WFC) Is Today's Unusual Social Activity Stock

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 Wells Fargo ( WFC) as an unusual social activity candidate. In addition to specific proprietary factors, Trade-Ideas identified Wells Fargo as such a stock due to the following factors:

  • WFC has 17x the normal benchmarked social activity for this time of the day compared to its average of 14.31 mentions/day.
  • WFC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $737.7 million.

Identifying stocks with 'Unusual Social Activity' tends to be a valuable process for traders looking to capitalize on the 'talk of the town' stocks that are basking in far more attention from the StockTwits financial community than normal. Good press? Bad press? It ultimately doesn't matter if it's good or bad if you know how to trade around the sentiment. Certain hedge funds use such data for their proprietary algorithms and it is not uncommon to see shared social sentiment play itself out in a stock's price trend.

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More details on WFC:

Wells Fargo & Company provides retail, commercial, and corporate banking services. The stock currently has a dividend yield of 2.6%. WFC has a PE ratio of 12.1. Currently there are 10 analysts that rate Wells Fargo a buy, 1 analyst rates it a sell, and 11 rate it a hold.

The average volume for Wells Fargo has been 16.1 million shares per day over the past 30 days. Wells Fargo has a market cap of $242.0 billion and is part of the financial sector and banking industry. The stock has a beta of 0.97 and a short float of 0.7% with 2.37 days to cover. Shares are up 0.3% year-to-date as of the close of trading on Monday.

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 Wells Fargo as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, expanding profit margins, good cash flow from operations and notable return on equity. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • 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 32.98% 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, WFC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • WELLS FARGO & CO has improved earnings per share by 12.5% 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, WELLS FARGO & CO increased its bottom line by earning $3.36 versus $2.82 in the prior year. This year, the market expects an improvement in earnings ($3.87 versus $3.36).
  • The gross profit margin for WELLS FARGO & CO is currently very high, coming in at 94.87%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 25.93% trails the industry average.
  • Net operating cash flow has increased to $21,103.00 million or 42.51% when compared to the same quarter last year. Despite an increase in cash flow of 42.51%, WELLS FARGO & CO is still growing at a significantly lower rate than the industry average of 119.99%.
  • 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 Commercial Banks industry and the overall market on the basis of return on equity, WELLS FARGO & CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

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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