Storm The Castle Stock Of The Day: Equinix (EQIX)

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 Equinix ( EQIX) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Equinix as such a stock due to the following factors:

  • EQIX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $180.8 million.
  • EQIX has traded 231,299 shares today.
  • EQIX is trading at 5.45 times the normal volume for the stock at this time of day.
  • EQIX crossed above its 200-day simple moving average.

'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize on. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on EQIX:

Equinix, Inc. provides data center services to protect and connect the information assets for the enterprises, financial services companies, and content and network providers primarily in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific. EQIX has a PE ratio of 102.3. Currently there are 12 analysts that rate Equinix a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Equinix has been 948,900 shares per day over the past 30 days. Equinix has a market cap of $8.9 billion and is part of the technology sector and internet industry. The stock has a beta of 0.91 and a short float of 21.2% with 10.55 days to cover. Shares are up 2.9% 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 Equinix as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and generally higher debt management risk.

Highlights from the ratings report include:
  • EQIX's revenue growth has slightly outpaced the industry average of 9.1%. Since the same quarter one year prior, revenues rose by 12.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 57.5% when compared to the same quarter one year prior, rising from $26.97 million to $42.47 million.
  • The gross profit margin for EQUINIX INC is rather high; currently it is at 50.48%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, EQIX's net profit margin of 7.82% significantly trails the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, EQUINIX INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • EQIX has underperformed the S&P 500 Index, declining 17.09% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

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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