Today's Roof Leaker Stock Is Ventas (VTR)

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 Ventas ( VTR) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Ventas as such a stock due to the following factors:

  • VTR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $108.8 million.
  • VTR has traded 614,343 shares today.
  • VTR is trading at 3.48 times the normal volume for the stock at this time of day.
  • VTR crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on VTR:

Ventas, Inc. is a publicly owned real estate investment trust. The firm engages in investment, management, financing, and leasing of properties in the healthcare industry. It invests in the real estate markets of the United States and Canada. The stock currently has a dividend yield of 4.5%. VTR has a PE ratio of 38.3. Currently there are 3 analysts that rate Ventas a buy, 3 analysts rate it a sell, and 6 rate it a hold.

The average volume for Ventas has been 1.8 million shares per day over the past 30 days. Ventas has a market cap of $18.8 billion and is part of the financial sector and real estate industry. The stock has a beta of 0.46 and a short float of 2.2% with 7.55 days to cover. Shares are up 11.9% 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 Ventas as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, reasonable valuation levels, growth in earnings per share and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 20.8% when compared to the same quarter one year prior, going from $114.58 million to $138.40 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.6%. Since the same quarter one year prior, revenues slightly increased by 9.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • VENTAS 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, VENTAS INC increased its bottom line by earning $1.66 versus $1.04 in the prior year. This year, the market expects an improvement in earnings ($1.68 versus $1.66).
  • 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.

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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