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 VeriSign ( VRSN) 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 VeriSign as such a stock due to the following factors:
- VRSN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $52.2 million.
- VRSN has traded 1.5 million shares today.
- VRSN traded in a range 223.7% of the normal price range with a price range of $1.47.
- VRSN traded below its daily resistance level (quality: 38 days, meaning that the stock is crossing a resistance level set by the last 38 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 VRSN with the Ticky from Trade-Ideas. See the FREE profile for VRSN NOW at Trade-Ideas More details on VRSN: VeriSign, Inc. provides Internet infrastructure services to various networks worldwide. The company offers domain name registry services that operate the authoritative directory of .com, .net, .cc, .tv, and .name domains, as well as the back-end systems for various.gov, .jobs, and .edu domains. VRSN has a PE ratio of 14.1. Currently there is 1 analyst that rates VeriSign a buy, no analysts rate it a sell, and 4 rate it a hold. The average volume for VeriSign has been 1.4 million shares per day over the past 30 days. VeriSign has a market cap of $6.7 billion and is part of the technology sector and internet industry. The stock has a beta of 1.21 and a short float of 15.1% with 18.62 days to cover. Shares are down 15.1% 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 VeriSign as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, increase in stock price during the past year, increase in net income and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow. Highlights from the ratings report include:
- VRSN's revenue growth trails the industry average of 21.3%. Since the same quarter one year prior, revenues slightly increased by 5.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The gross profit margin for VERISIGN INC is currently very high, coming in at 87.13%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 37.95% significantly outperformed against the industry average.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. 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.
- The net income growth from the same quarter one year ago has exceeded that of the Internet Software & Services industry average, but is less than that of the S&P 500. The net income increased by 11.7% when compared to the same quarter one year prior, going from $84.51 million to $94.42 million.
- VERISIGN INC has improved earnings per share by 23.1% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, VERISIGN INC increased its bottom line by earning $3.54 versus $1.91 in the prior year. For the next year, the market is expecting a contraction of 24.9% in earnings ($2.66 versus $3.54).
- You can view the full VeriSign 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.