SLM (SLM) Falls Further As It's Water-Logged And Getting Wetter

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 SLM ( SLM) 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 SLM as such a stock due to the following factors:

  • SLM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $78.8 million.
  • SLM has traded 517,703 shares today.
  • SLM traded in a range 276.9% of the normal price range with a price range of $0.86.
  • SLM traded below its daily resistance level (quality: 69 days, meaning that the stock is crossing a resistance level set by the last 69 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 SLM:

SLM Corporation, also known as Sallie Mae, originates, acquires, finances, and services private education loans in the United States. The company operates through three segments: Consumer Lending, Business Services, and FFELP Loans. The stock currently has a dividend yield of 2.2%. SLM has a PE ratio of 8.6. Currently there are 4 analysts that rate SLM a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for SLM has been 2.7 million shares per day over the past 30 days. SLM has a market cap of $11.8 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.21 and a short float of 3.1% with 4.37 days to cover. Shares are up 3.6% year-to-date as of the close of trading on Wednesday.

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 SLM as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, notable return on equity and attractive valuation levels. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 41.02% and other important driving factors, this stock has surged by 51.65% 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, SLM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • SLM CORP has improved earnings per share by 41.0% 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, SLM CORP increased its bottom line by earning $1.94 versus $1.13 in the prior year. This year, the market expects an improvement in earnings ($2.95 versus $1.94).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Consumer Finance industry. The net income increased by 38.3% when compared to the same quarter one year prior, rising from $188.00 million to $260.00 million.
  • 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. When compared to other companies in the Consumer Finance industry and the overall market, SLM CORP's return on equity exceeds that of the industry average and significantly exceeds 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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