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 YY ( YY) 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 YY as such a stock due to the following factors:
- YY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $154.1 million.
- YY has traded 1.2 million shares today.
- YY is trading at 1.77 times the normal volume for the stock at this time of day.
- YY 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 YY with the Ticky from Trade-Ideas. See the FREE profile for YY NOW at Trade-Ideas More details on YY: YY Inc., through its subsidiaries, operates an online social platform in the People's Republic of China. YY has a PE ratio of 61.2. Currently there are 4 analysts that rate YY a buy, no analysts rate it a sell, and none rate it a hold. The average volume for YY has been 2.3 million shares per day over the past 30 days. YY has a market cap of $3.6 billion and is part of the technology sector and internet industry. Shares are up 25.7% 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 YY as a hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the stock itself is trading at a premium valuation. Highlights from the ratings report include:
- Compared to other companies in the Internet Software & Services industry and the overall market, YY INC -ADR's return on equity significantly exceeds that of both the industry average and the S&P 500.
- YY's very impressive revenue growth greatly exceeded the industry average of 11.7%. Since the same quarter one year prior, revenues leaped by 136.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- YY 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. Along with this, the company maintains a quick ratio of 3.23, which clearly demonstrates the ability to cover short-term cash needs.
- Powered by its strong earnings growth of 440.00% and other important driving factors, this stock has surged by 281.17% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.
- You can view the full YY 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.