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 AOL ( AOL) 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 AOL as such a stock due to the following factors:
- AOL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $89.9 million.
- AOL has traded 2.0 million shares today.
- AOL traded in a range 202.2% of the normal price range with a price range of $5.13.
- AOL traded below its daily resistance level (quality: 5 days, meaning that the stock is crossing a resistance level set by the last 5 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 AOL with the Ticky from Trade-Ideas. See the FREE profile for AOL NOW at Trade-Ideas More details on AOL: AOL Inc., a Web services brand company, offers a suite of online content, products, and services to consumers, advertisers, publishers, and subscribers worldwide. AOL has a PE ratio of 39.3. Currently there are 9 analysts that rate AOL a buy, 1 analyst rates it a sell, and 5 rate it a hold. The average volume for AOL has been 1.3 million shares per day over the past 30 days. AOL has a market cap of $3.9 billion and is part of the technology sector and internet industry. The stock has a beta of 1.25 and a short float of 7.3% with 2.50 days to cover. Shares are up 2% 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 AOL as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- Compared to its closing price of one year ago, AOL's share price has jumped by 52.74%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, AOL should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- AOL's revenue growth trails the industry average of 17.2%. Since the same quarter one year prior, revenues slightly increased by 5.6%. 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.
- Although AOL's debt-to-equity ratio of 0.04 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.15, which illustrates the ability to avoid short-term cash problems.
- AOL 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, AOL INC increased its bottom line by earning $11.02 versus $0.14 in the prior year. For the next year, the market is expecting a contraction of 81.5% in earnings ($2.04 versus $11.02).
- You can view the full AOL 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.