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 GNC Holdings ( GNC) 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 GNC Holdings as such a stock due to the following factors:
- GNC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $47.6 million.
- GNC has traded 1.5 million shares today.
- GNC traded in a range 202.4% of the normal price range with a price range of $1.23.
- GNC traded below its daily resistance level (quality: 493 days, meaning that the stock is crossing a resistance level set by the last 493 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 GNC with the Ticky from Trade-Ideas. See the FREE profile for GNC NOW at Trade-Ideas More details on GNC: GNC Holdings, Inc. operates as a specialty retailer of health and wellness products. It operates through three segments: Retail, Franchise, and Manufacturing/Wholesale. The stock currently has a dividend yield of 1.7%. GNC has a PE ratio of 13.7. Currently there are 7 analysts that rate GNC Holdings a buy, 1 analyst rates it a sell, and 4 rate it a hold. The average volume for GNC Holdings has been 1.8 million shares per day over the past 30 days. GNC has a market cap of $3.4 billion and is part of the services sector and retail industry. The stock has a beta of 1.21 and a short float of 3% with 1.99 days to cover. Shares are down 36.7% year-to-date as of the close of trading on Thursday. 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 GNC Holdings as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations, growth in earnings per share 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:
- GNC's revenue growth has slightly outpaced the industry average of 2.0%. Since the same quarter one year prior, revenues slightly increased by 1.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Specialty Retail industry and the overall market, GNC HOLDINGS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has increased to $123.13 million or 28.89% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -15.13%.
- GNC HOLDINGS INC's earnings per share improvement from the most recent quarter was slightly positive. 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, GNC HOLDINGS INC increased its bottom line by earning $2.72 versus $2.29 in the prior year. This year, the market expects an improvement in earnings ($3.07 versus $2.72).
- 39.78% is the gross profit margin for GNC HOLDINGS INC which we consider to be strong. Regardless of GNC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GNC's net profit margin of 10.32% compares favorably to the industry average.
- You can view the full GNC Holdings 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.