American Tower (AMT) Falls Further As It's Water-Logged And Getting Wetter

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 American Tower ( AMT) 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 American Tower as such a stock due to the following factors:

  • AMT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $150.0 million.
  • AMT has traded 169,892 shares today.
  • AMT traded in a range 223% of the normal price range with a price range of $2.54.
  • AMT traded below its daily resistance level (quality: 12 days, meaning that the stock is crossing a resistance level set by the last 12 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 AMT:

American Tower Corporation is a real estate investment trust. It invests in the real estate markets across the globe. The firm through its subsidiaries owns, operates and develops wireless and broadcast communications real estate. The stock currently has a dividend yield of 1.4%. AMT has a PE ratio of 57.2. Currently there are 15 analysts that rate American Tower a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for American Tower has been 2.2 million shares per day over the past 30 days. American Tower has a market cap of $33.2 billion and is part of the financial sector and real estate industry. The stock has a beta of 0.17 and a short float of 2.2% with 4.64 days to cover. Shares are up 4% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates American Tower as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • AMT's revenue growth has slightly outpaced the industry average of 6.8%. Since the same quarter one year prior, revenues rose by 13.3%. 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.
  • Net operating cash flow has slightly increased to $359.92 million or 1.76% when compared to the same quarter last year. In addition, AMERICAN TOWER CORP has also vastly surpassed the industry average cash flow growth rate of -76.73%.
  • The gross profit margin for AMERICAN TOWER CORP is currently very high, coming in at 73.23%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 22.29% trails the industry average.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • AMERICAN TOWER CORP's earnings per share declined by 22.4% in the most recent quarter compared to 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, AMERICAN TOWER CORP increased its bottom line by earning $1.60 versus $1.00 in the prior year. This year, the market expects an improvement in earnings ($1.61 versus $1.60).

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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