Intuit (INTU) Is Today's 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 Intuit ( INTU) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Intuit as such a stock due to the following factors:

  • INTU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $156.2 million.
  • INTU has a PE ratio of 32.3.
  • INTU is currently in the upper 30% of its 1-year range.
  • INTU is in the upper 25% of its 20-day range.
  • INTU is in the upper 35% of its 5-day range.
  • INTU is currently trading above yesterday's high.
  • INTU has experienced a gap between today's open and yesterday's close of 0.6%.

'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 INTU:

Intuit Inc. provides business and financial management solutions for small businesses, consumers, and accounting professionals in the United States, Canada, the United Kingdom, Australia, India, and Singapore. The stock currently has a dividend yield of 1.1%. INTU has a PE ratio of 32.3. Currently there are 7 analysts that rate Intuit a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Intuit has been 1.6 million shares per day over the past 30 days. Intuit has a market cap of $26.5 billion and is part of the technology sector and computer software & services industry. Shares are up 21.4% 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 Intuit as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • INTU's revenue growth trails the industry average of 27.0%. Since the same quarter one year prior, revenues slightly increased by 8.0%. 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.
  • INTU's debt-to-equity ratio is very low at 0.17 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 1.34, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has increased to -$118.00 million or 37.89% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 11.20%.
  • 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. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The gross profit margin for INTUIT INC is currently very high, coming in at 81.10%. Regardless of INTU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, INTU's net profit margin of -12.50% significantly underperformed when compared to 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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