Strong On High Volume: Alliance Data Systems (ADS)

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 Alliance Data Systems ( ADS) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Alliance Data Systems as such a stock due to the following factors:

  • ADS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $179.0 million.
  • ADS has traded 276,055 shares today.
  • ADS is trading at 14.29 times the normal volume for the stock at this time of day.
  • ADS is trading at a new high 4.04% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in ADS with the Ticky from Trade-Ideas. See the FREE profile for ADS NOW at Trade-Ideas

More details on ADS:

Alliance Data Systems Corporation provides marketing and loyalty solutions in the United States, Canada, and other countries. ADS has a PE ratio of 32.1. Currently there are 12 analysts that rate Alliance Data Systems a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Alliance Data Systems has been 541,100 shares per day over the past 30 days. Alliance Data Systems has a market cap of $14.4 billion and is part of the services sector and diversified services industry. The stock has a beta of 1.17 and a short float of 10.7% with 3.15 days to cover. Shares are down 3.8% 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 Alliance Data Systems as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 12.2%. Since the same quarter one year prior, revenues rose by 23.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ALLIANCE DATA SYSTEMS CORP has improved earnings per share by 28.1% 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. We feel that this trend should continue. During the past fiscal year, ALLIANCE DATA SYSTEMS CORP increased its bottom line by earning $7.43 versus $6.60 in the prior year. This year, the market expects an improvement in earnings ($12.40 versus $7.43).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the IT Services industry average. The net income increased by 18.0% when compared to the same quarter one year prior, going from $116.44 million to $137.44 million.
  • Net operating cash flow has slightly increased to $254.69 million or 1.28% when compared to the same quarter last year. In addition, ALLIANCE DATA SYSTEMS CORP has also modestly surpassed the industry average cash flow growth rate of -2.67%.
  • Powered by its strong earnings growth of 28.07% and other important driving factors, this stock has surged by 31.62% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

null

More from Markets

Inside Carnival's Mind Blowing New Horizon Cruise Ship (Video)

Inside Carnival's Mind Blowing New Horizon Cruise Ship (Video)

Jim Cramer: The 10-Year Yield Could Go to 2.75%

Jim Cramer: The 10-Year Yield Could Go to 2.75%

Oil Slumps, Gas Spikes Ahead of Holiday Weekend; Assessing the Chipmakers--ICYMI

Oil Slumps, Gas Spikes Ahead of Holiday Weekend; Assessing the Chipmakers--ICYMI

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Dow and S&P 500 Decline, Energy Shares Fall as U.S. Crude Oil Slides 4%

Dow and S&P 500 Decline, Energy Shares Fall as U.S. Crude Oil Slides 4%