Humana (HUM) Shows Signs Of Being Water-Logged And Getting Wetter

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 Humana ( HUM) 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 Humana as such a stock due to the following factors:

  • HUM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $133.5 million.
  • HUM has traded 4.5 million shares today.
  • HUM traded in a range 218.7% of the normal price range with a price range of $5.52.
  • HUM traded below its daily resistance level (quality: 17 days, meaning that the stock is crossing a resistance level set by the last 17 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 HUM:

Humana Inc., a health care company, offers a range of insurance products, and health and wellness services that incorporate an integrated approach to lifelong well-being. The company operates in Retail, Employer Group, Healthcare Services, and Other Businesses segments. The stock currently has a dividend yield of 0.8%. HUM has a PE ratio of 20.8. Currently there are 9 analysts that rate Humana a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Humana has been 1.1 million shares per day over the past 30 days. Humana has a market cap of $21.4 billion and is part of the health care sector and health services industry. The stock has a beta of 1.18 and a short float of 2.9% with 4.31 days to cover. Shares are up 35.5% 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 Humana as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, HUM's share price has jumped by 50.40%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HUM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 19.5%. Since the same quarter one year prior, revenues rose by 18.4%. 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.
  • HUM's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.43, which illustrates the ability to avoid short-term cash problems.
  • HUMANA INC's earnings per share declined by 16.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HUMANA INC increased its bottom line by earning $7.70 versus $7.46 in the prior year. This year, the market expects an improvement in earnings ($7.75 versus $7.70).

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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