Water-Logged And Getting Wetter: Team Health Holdings (TMH)

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 Team Health Holdings ( TMH) 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 Team Health Holdings as such a stock due to the following factors:

  • TMH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $32.6 million.
  • TMH has traded 395,246 shares today.
  • TMH traded in a range 210.5% of the normal price range with a price range of $3.00.
  • TMH traded below its daily resistance level (quality: 14 days, meaning that the stock is crossing a resistance level set by the last 14 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.

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More details on TMH:

Team Health Holdings, Inc. provides outsourced healthcare professional staffing and administrative services to hospitals and other healthcare providers in the United States. TMH has a PE ratio of 61.3. Currently there are 10 analysts that rate Team Health Holdings a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Team Health Holdings has been 565,400 shares per day over the past 30 days. Team Health has a market cap of $4.4 billion and is part of the services sector and diversified services industry. Shares are up 36.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Team Health Holdings as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:
  • TEAM HEALTH HOLDINGS INC 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, TEAM HEALTH HOLDINGS INC increased its bottom line by earning $1.23 versus $0.93 in the prior year. This year, the market expects an improvement in earnings ($2.30 versus $1.23).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 64.6% when compared to the same quarter one year prior, rising from $18.35 million to $30.20 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 19.5%. Since the same quarter one year prior, revenues slightly increased by 9.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has significantly increased by 64.23% to $40.46 million when compared to the same quarter last year. In addition, TEAM HEALTH HOLDINGS INC has also vastly surpassed the industry average cash flow growth rate of -26.60%.
  • Powered by its strong earnings growth of 61.53% and other important driving factors, this stock has surged by 42.84% 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.

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