Water-Logged And Getting Wetter: Willis Group Holdings (WSH)

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 Willis Group Holdings ( WSH) 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 Willis Group Holdings as such a stock due to the following factors:

  • WSH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $32.3 million.
  • WSH has traded 1.1 million shares today.
  • WSH traded in a range 203.3% of the normal price range with a price range of $1.35.
  • WSH traded below its daily resistance level (quality: 235 days, meaning that the stock is crossing a resistance level set by the last 235 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 WSH:

Willis Group Holdings Public Limited Company provides a range of insurance brokerage, reinsurance, and risk management consulting services worldwide. The stock currently has a dividend yield of 2.8%. WSH has a PE ratio of 16.0. Currently there are 2 analysts that rate Willis Group Holdings a buy, 1 analyst rates it a sell, and 10 rate it a hold.

The average volume for Willis Group Holdings has been 582,600 shares per day over the past 30 days. Willis Group has a market cap of $7.5 billion and is part of the financial sector and insurance industry. The stock has a beta of 0.71 and a short float of 1% with 1.89 days to cover. Shares are down 6.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Willis Group Holdings as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, impressive record of earnings per share growth, compelling growth in net income and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 21.3%. Since the same quarter one year prior, revenues slightly increased by 5.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • WILLIS GROUP HOLDINGS PLC reported significant earnings per share improvement 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, WILLIS GROUP HOLDINGS PLC turned its bottom line around by earning $2.05 versus -$2.61 in the prior year. This year, the market expects an improvement in earnings ($2.82 versus $2.05).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Insurance industry and the overall market, WILLIS GROUP HOLDINGS PLC's return on equity exceeds that of both the industry average and the S&P 500.
  • 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. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Insurance industry average, but is greater than that of the S&P 500. The net income increased by 108.4% when compared to the same quarter one year prior, rising from -$805.00 million to $68.00 million.

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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