Equinix (EQIX) Highlighted As Momo Momentum 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 Equinix ( EQIX) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Equinix as such a stock due to the following factors:

  • EQIX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $240.5 million.
  • EQIX has a PE ratio of 76.9.
  • EQIX is currently in the upper 30% of its 1-year range.
  • EQIX is in the upper 25% of its 20-day range.
  • EQIX is in the upper 35% of its 5-day range.
  • EQIX is currently trading above yesterday's high.
  • EQIX has experienced a gap between today's open and yesterday's close of 0.7%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on EQIX:

Equinix, Inc. provides data center services to protect and connect the information assets for the enterprises, financial services companies, and content and network providers primarily in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific. EQIX has a PE ratio of 76.9. Currently there are 9 analysts that rate Equinix a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Equinix has been 696,500 shares per day over the past 30 days. Equinix has a market cap of $11.2 billion and is part of the technology sector and internet industry. The stock has a beta of 0.83 and a short float of 8.6% with 3.37 days to cover. Shares are up 18.8% year-to-date as of the close of trading on Tuesday.

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 Equinix as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, good cash flow from operations, expanding profit margins and increase in net income. 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:
  • EQIX's revenue growth trails the industry average of 29.4%. Since the same quarter one year prior, revenues rose by 14.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, EQIX's share price has jumped by 27.86%, exceeding the performance of the broader market during that same time frame. 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.
  • Net operating cash flow has slightly increased to $216.44 million or 4.78% when compared to the same quarter last year. Despite an increase in cash flow, EQUINIX INC's cash flow growth rate is still lower than the industry average growth rate of 26.90%.
  • EQUINIX INC' earnings per share from the most recent quarter came in slightly below the year earlier 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, EQUINIX INC reported lower earnings of $1.84 versus $2.57 in the prior year. This year, the market expects an improvement in earnings ($2.89 versus $1.84).
  • The gross profit margin for EQUINIX INC is rather high; currently it is at 50.99%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, EQIX's net profit margin of 6.90% is significantly lower than the industry average.

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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