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 Prospect Capital Corporation ( PSEC) 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 Prospect Capital Corporation as such a stock due to the following factors:
- PSEC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $39.9 million.
- PSEC has traded 1.8 million shares today.
- PSEC traded in a range 296.2% of the normal price range with a price range of $0.22.
- PSEC traded below its daily resistance level (quality: 315 days, meaning that the stock is crossing a resistance level set by the last 315 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. EXCLUSIVE OFFER: Get the inside scoop on opportunities in PSEC with the Ticky from Trade-Ideas. See the FREE profile for PSEC NOW at Trade-Ideas More details on PSEC: Prospect Capital Corporation is a business development company. The stock currently has a dividend yield of 12.3%. PSEC has a PE ratio of 9.3. Currently there are 6 analysts that rate Prospect Capital Corporation a buy, no analysts rate it a sell, and 4 rate it a hold. The average volume for Prospect Capital Corporation has been 4.9 million shares per day over the past 30 days. Prospect has a market cap of $3.4 billion and is part of the financial sector and financial services industry. The stock has a beta of 0.86 and a short float of 4.2% with 2.86 days to cover. Shares are down 4.3% year-to-date as of the close of trading on Tuesday. 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 Prospect Capital Corporation as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, expanding profit margins, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 7.9%. Since the same quarter one year prior, revenues slightly increased by 7.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 83.6% when compared to the same quarter one year prior, rising from $46.49 million to $85.36 million.
- The gross profit margin for PROSPECT CAPITAL CORP is rather high; currently it is at 68.21%. Regardless of PSEC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PSEC's net profit margin of 47.93% significantly outperformed against the industry.
- Net operating cash flow has significantly increased by 52.42% to -$290.63 million when compared to the same quarter last year. Despite an increase in cash flow, PROSPECT CAPITAL CORP's cash flow growth rate is still lower than the industry average growth rate of 97.77%.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, PROSPECT CAPITAL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- You can view the full Prospect Capital Corporation 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.