VeriSign (VRSN) Is Today's Water-Logged And Getting Wetter Stock

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

  • VRSN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $146.5 million.
  • VRSN has traded 538,942 shares today.
  • VRSN traded in a range 205.7% of the normal price range with a price range of $2.48.
  • VRSN traded below its daily resistance level (quality: 119 days, meaning that the stock is crossing a resistance level set by the last 119 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 VRSN:

VeriSign, Inc. provides Internet infrastructure services to various networks worldwide. It offers registry services that operate the authoritative directory of .com, .net, .cc, .tv, and .name domain names, as well as the back-end systems for various for all .gov, .jobs, and .edu domain names. VRSN has a PE ratio of 24.9. Currently there are 2 analysts that rate VeriSign a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for VeriSign has been 1.5 million shares per day over the past 30 days. VeriSign has a market cap of $7.6 billion and is part of the technology sector and internet industry. The stock has a beta of 1.24 and a short float of 15% with 7.85 days to cover. Shares are down 7.3% 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 VeriSign 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, revenue growth, expanding profit margins and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

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 37.68% 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, VRSN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • VERISIGN INC has improved earnings per share by 15.2% 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, VERISIGN INC increased its bottom line by earning $1.91 versus $0.84 in the prior year. This year, the market expects an improvement in earnings ($2.34 versus $1.91).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 17.2%. Since the same quarter one year prior, revenues slightly increased by 9.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for VERISIGN INC is currently very high, coming in at 87.01%. Regardless of VRSN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VRSN's net profit margin of 33.19% significantly outperformed against the industry.
  • Net operating cash flow has increased to $134.48 million or 10.57% when compared to the same quarter last year. Despite an increase in cash flow, VERISIGN INC's average is still marginally south of the industry average growth rate of 12.76%.

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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