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 Alere ( ALR) 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 Alere as such a stock due to the following factors:
- ALR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $35.6 million.
- ALR has traded 83,379 shares today.
- ALR traded in a range 229.8% of the normal price range with a price range of $2.41.
- ALR traded below its daily resistance level (quality: 51 days, meaning that the stock is crossing a resistance level set by the last 51 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 ALR with the Ticky from Trade-Ideas. See the FREE profile for ALR NOW at Trade-Ideas More details on ALR: Alere Inc. provides diagnostics and services for cardiology, infectious disease, toxicology, and diabetes in the United States and internationally. The company operates in three segments: Professional Diagnostics, Health Information Solutions, and Consumer Diagnostics. Currently there are 3 analysts that rate Alere a buy, 1 analyst rates it a sell, and 3 rate it a hold. The average volume for Alere has been 569,300 shares per day over the past 30 days. Alere has a market cap of $2.9 billion and is part of the health care sector and health services industry. The stock has a beta of 2.68 and a short float of 8.4% with 5.57 days to cover. Shares are up 0.6% 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 Alere as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and weak operating cash flow. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 24.3%. Since the same quarter one year prior, revenues slightly increased by 9.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to its closing price of one year ago, ALR's share price has jumped by 82.13%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- ALERE INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ALERE INC continued to lose money by earning -$1.23 versus -$2.15 in the prior year. This year, the market expects an improvement in earnings ($2.35 versus -$1.23).
- Currently the debt-to-equity ratio of 1.85 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, ALR's quick ratio is somewhat strong at 1.34, demonstrating the ability to handle short-term liquidity needs.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income has significantly decreased by 411.4% when compared to the same quarter one year ago, falling from -$3.80 million to -$19.45 million.
- You can view the full Alere 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.