Select Medical Holdings (SEM) Is Today's Dead Cat Bounce Stock

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 Select Medical Holdings ( SEM) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Select Medical Holdings as such a stock due to the following factors:

  • SEM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $16.1 million.
  • SEM has traded 128,403 shares today.
  • SEM is up 3.2% today.
  • SEM was down 12.5% yesterday.

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More details on SEM:

Select Medical Holdings Corporation, through its subsidiary, Select Medical Corporation, operates specialty hospitals and outpatient rehabilitation clinics in the United States. It operates in two segments, Specialty Hospitals and Outpatient Rehabilitation. The stock currently has a dividend yield of 2.5%. SEM has a PE ratio of 19.2. Currently there are 3 analysts that rate Select Medical Holdings a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Select Medical Holdings has been 775,900 shares per day over the past 30 days. Select Medical has a market cap of $2.1 billion and is part of the health care sector and health services industry. The stock has a beta of 1.09 and a short float of 1.7% with 2.06 days to cover. Shares are up 35.7% 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 Select Medical Holdings as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, attractive valuation levels and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, SEM's share price has jumped by 77.27%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SEM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • SEM's revenue growth trails the industry average of 20.9%. Since the same quarter one year prior, revenues slightly increased by 1.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • SELECT MEDICAL HOLDINGS CORP reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, SELECT MEDICAL HOLDINGS CORP reported lower earnings of $0.82 versus $1.05 in the prior year. This year, the market expects an improvement in earnings ($0.94 versus $0.82).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Health Care Providers & Services industry and the overall market, SELECT MEDICAL HOLDINGS CORP's return on equity exceeds that of both the industry average and the S&P 500.

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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