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 Cerner Corporation ( CERN) 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 Cerner Corporation as such a stock due to the following factors:
- CERN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $100.8 million.
- CERN has traded 1.9 million shares today.
- CERN traded in a range 241.3% of the normal price range with a price range of $3.52.
- CERN traded below its daily resistance level (quality: 118 days, meaning that the stock is crossing a resistance level set by the last 118 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 CERN with the Ticky from Trade-Ideas. See the FREE profile for CERN NOW at Trade-Ideas More details on CERN: Cerner Corporation designs, develops, markets, installs, hosts, and supports healthcare information technology, healthcare devices, hardware, and content solutions for healthcare organizations and consumers worldwide. CERN has a PE ratio of 43.5. Currently there are 10 analysts that rate Cerner Corporation a buy, 1 analyst rates it a sell, and 9 rate it a hold. The average volume for Cerner Corporation has been 1.3 million shares per day over the past 30 days. Cerner has a market cap of $19.1 billion and is part of the technology sector and computer software & services industry. Shares are down 0.1% year-to-date as of the close of trading on Tuesday. 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 Cerner Corporation 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, revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow. 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 36.46% 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, CERN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- CERNER CORP has improved earnings per share by 17.9% 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, CERNER CORP increased its bottom line by earning $1.13 versus $0.88 in the prior year. This year, the market expects an improvement in earnings ($1.41 versus $1.13).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Health Care Technology industry average. The net income increased by 16.6% when compared to the same quarter one year prior, going from $98.89 million to $115.34 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 12.4%. Since the same quarter one year prior, revenues slightly increased by 7.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- CERN's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CERN has a quick ratio of 2.48, which demonstrates the ability of the company to cover short-term liquidity needs.
- You can view the full Cerner Corporation 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.