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 Tenet Healthcare ( THC) 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 Tenet Healthcare as such a stock due to the following factors:

  • THC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $125.3 million.
  • THC has traded 1.5 million shares today.
  • THC is trading at 1.67 times the normal volume for the stock at this time of day.
  • THC 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 THC:

Tenet Healthcare Corporation, an investor-owned health care services company, primarily operates acute care hospitals and related health care facilities in the United States. Currently there are 9 analysts that rate Tenet Healthcare a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Tenet Healthcare has been 1.6 million shares per day over the past 30 days. Tenet Healthcare has a market cap of $5.1 billion and is part of the health care sector and health services industry. The stock has a beta of 1.24 and a short float of 9.8% with 3.19 days to cover. Shares are up 21.5% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Tenet Healthcare as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and poor profit margins.

Highlights from the ratings report include:
  • THC's very impressive revenue growth greatly exceeded the industry average of 18.9%. Since the same quarter one year prior, revenues leaped by 73.5%. 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.
  • Net operating cash flow has slightly increased to $221.00 million or 7.28% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -24.79%.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The debt-to-equity ratio is very high at 15.72 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, THC maintains a poor quick ratio of 0.78, which illustrates the inability to avoid short-term cash problems.
  • The gross profit margin for TENET HEALTHCARE CORP is currently extremely low, coming in at 10.98%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.21% trails that of 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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