Trade-Ideas: Open Text (OTEX) Is Today's Strong And Under The Radar 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 Open Text ( OTEX) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Open Text as such a stock due to the following factors:

  • OTEX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $10.0 million.
  • OTEX is making at least a new 3-day high.
  • OTEX has a PE ratio of 31.6.
  • OTEX is mentioned 1.00 times per day on StockTwits.
  • OTEX has not yet been mentioned on StockTwits today.
  • OTEX is currently in the upper 20% of its 1-year range.
  • OTEX is in the upper 35% of its 20-day range.
  • OTEX is in the upper 45% of its 5-day range.
  • OTEX is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

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More details on OTEX:

Open Text Corporation provides a suite of software products and services that assist organizations in finding, utilizing, and sharing business information from various devices. The stock currently has a dividend yield of 1.2%. OTEX has a PE ratio of 31.6. Currently there are 7 analysts that rate Open Text a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Open Text has been 281,600 shares per day over the past 30 days. Open Text has a market cap of $7.0 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.28 and a short float of 6.7% with 27.98 days to cover. Shares are up 24.4% 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 Open Text as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and reasonable valuation levels. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 11.6%. Since the same quarter one year prior, revenues rose by 42.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 102.81% and other important driving factors, this stock has surged by 63.08% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, OTEX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • OPEN TEXT CORP reported significant earnings per share improvement 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, OPEN TEXT CORP increased its bottom line by earning $1.81 versus $1.26 in the prior year. This year, the market expects an improvement in earnings ($3.88 versus $1.81).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 108.9% when compared to the same quarter one year prior, rising from $42.17 million to $88.11 million.

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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