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 Visa ( V) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Visa as such a stock due to the following factors:
- V has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $680.1 million.
- V has traded 2.3 million shares today.
- V is trading at 3.03 times the normal volume for the stock at this time of day.
- V crossed below its 200-day simple moving average.
'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend. EXCLUSIVE OFFER: Get the inside scoop on opportunities in V with the Ticky from Trade-Ideas. See the FREE profile for V NOW at Trade-Ideas More details on V: Visa Inc., a payments technology company, operates as a retail electronic payments network worldwide. The company facilitates commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses, and government entities. The stock currently has a dividend yield of 0.7%. V has a PE ratio of 28.8. Currently there are 18 analysts that rate Visa a buy, no analysts rate it a sell, and 7 rate it a hold. The average volume for Visa has been 3.3 million shares per day over the past 30 days. Visa has a market cap of $108.4 billion and is part of the financial sector and financial services industry. The stock has a beta of 0.59 and a short float of 3.1% with 4.68 days to cover. Shares are down 6.7% year-to-date as of the close of trading on Friday. 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 Visa as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, expanding profit margins and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 20.4%. Since the same quarter one year prior, revenues rose by 10.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- V has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, V has a quick ratio of 1.54, which demonstrates the ability of the company to cover short-term liquidity needs.
- VISA INC has improved earnings per share by 14.0% 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, VISA INC increased its bottom line by earning $7.58 versus $3.13 in the prior year. This year, the market expects an improvement in earnings ($8.89 versus $7.58).
- The gross profit margin for VISA INC is rather high; currently it is at 69.22%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 44.59% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 154.56% to $1,541.00 million when compared to the same quarter last year. In addition, VISA INC has also vastly surpassed the industry average cash flow growth rate of 17.47%.
- You can view the full Visa 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.