Trade-Ideas: Tenet Healthcare (THC) Is Today's Strong On High Relative Volume 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 Tenet Healthcare ( THC) as a strong on high 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 $72.6 million.
  • THC has traded 221,022 shares today.
  • THC is trading at 3.75 times the normal volume for the stock at this time of day.
  • THC is trading at a new high 3.02% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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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 1.9 million shares per day over the past 30 days. Tenet Healthcare has a market cap of $4.6 billion and is part of the health care sector and health services industry. The stock has a beta of 1.14 and a short float of 10.6% with 6.02 days to cover. Shares are up 11.9% year-to-date as of the close of trading on Wednesday.

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 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 increase in stock price during the past year. 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 19.9%. 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 -20.40%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of 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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