Today's Unusual Social Activity Stock: Time Warner (TWX)

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 Time Warner ( TWX) as an unusual social activity candidate. In addition to specific proprietary factors, Trade-Ideas identified Time Warner as such a stock due to the following factors:

  • TWX has more that 20x the normal benchmarked social activity for this time of the day compared to its average of 2.39 mentions/day.
  • TWX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $347.8 million.

Identifying stocks with 'Unusual Social Activity' tends to be a valuable process for traders looking to capitalize on the 'talk of the town' stocks that are basking in far more attention from the StockTwits financial community than normal. Good press? Bad press? It ultimately doesn't matter if it's good or bad if you know how to trade around the sentiment. Certain hedge funds use such data for their proprietary algorithms and it is not uncommon to see shared social sentiment play itself out in a stock's price trend.

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More details on TWX:

Time Warner Inc. operates as a media and entertainment company in the United States and internationally. The company operates in four segments: Turner, Home Box Office, Warner Bros., and Time Inc. The stock currently has a dividend yield of 1.9%. TWX has a PE ratio of 17.8. Currently there are 14 analysts that rate Time Warner a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Time Warner has been 5.8 million shares per day over the past 30 days. Time Warner has a market cap of $58.0 billion and is part of the services sector and media industry. The stock has a beta of 1.36 and a short float of 1.2% with 2.06 days to cover. Shares are down 6.5% 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 Time Warner 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, reasonable valuation levels, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • TWX's revenue growth has slightly outpaced the industry average of 3.9%. Since the same quarter one year prior, revenues slightly increased by 4.9%. 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.
  • The debt-to-equity ratio is somewhat low, currently at 0.67, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.16, which illustrates the ability to avoid short-term cash problems.
  • 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.
  • TIME WARNER INC's earnings per share declined by 7.8% 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, TIME WARNER INC increased its bottom line by earning $3.76 versus $3.00 in the prior year. This year, the market expects an improvement in earnings ($3.92 versus $3.76).

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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