Barbarian At The Gate: EHealth (EHTH)

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 eHealth ( EHTH) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified eHealth as such a stock due to the following factors:

  • EHTH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $27.0 million.
  • EHTH has traded 208,663 shares today.
  • EHTH traded in a range 208.2% of the normal price range with a price range of $5.81.
  • EHTH traded above its daily resistance level (quality: 28 days, meaning that the stock is crossing a resistance level set by the last 28 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' 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 positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in EHTH with the Ticky from Trade-Ideas. See the FREE profile for EHTH NOW at Trade-Ideas

More details on EHTH:

eHealth, Inc. provides online private health insurance services for individuals, families, and small businesses in the United States. EHTH has a PE ratio of 129.7. Currently there are 6 analysts that rate eHealth a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for eHealth has been 413,100 shares per day over the past 30 days. eHealth has a market cap of $893.8 million and is part of the financial sector and insurance industry. The stock has a beta of 0.90 and a short float of 21.1% with 3.22 days to cover. Shares are up 4.4% year-to-date as of the close of trading on Monday.

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 eHealth as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and premium valuation.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 19.1%. Since the same quarter one year prior, revenues rose by 19.6%. 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.
  • Net operating cash flow has increased to $6.17 million or 17.83% when compared to the same quarter last year. In addition, EHEALTH INC has also vastly surpassed the industry average cash flow growth rate of -74.54%.
  • Compared to its closing price of one year ago, EHTH's share price has jumped by 193.29%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, EHEALTH INC underperformed against that of the industry average and is significantly less than that of the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

null

More from Markets

Stocks Rise Sharply, Facebook Ignites a Nasdaq Rally

Stocks Rise Sharply, Facebook Ignites a Nasdaq Rally

Jim Cramer: Visa Is a Technology Company That Masquerades as a Financial Company

Jim Cramer: Visa Is a Technology Company That Masquerades as a Financial Company

Jim Cramer: Chipotle Shares Are Probably Done Going Down

Jim Cramer: Chipotle Shares Are Probably Done Going Down

Jim Cramer: This Is a Sad Time for Southwest Airlines

Jim Cramer: This Is a Sad Time for Southwest Airlines

Jim Cramer Just Spoke to Larry Kudlow About the China Trade Negotiations

Jim Cramer Just Spoke to Larry Kudlow About the China Trade Negotiations