Today's Water-Logged And Getting Wetter Stock: Alexandria Real Estate Equities (ARE)

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.

Trade-Ideas LLC identified Alexandria Real Estate Equities ( ARE) 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 Alexandria Real Estate Equities as such a stock due to the following factors:

  • ARE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $34.1 million.
  • ARE has traded 156,623 shares today.
  • ARE traded in a range 201.6% of the normal price range with a price range of $2.78.
  • ARE traded below its daily resistance level (quality: 115 days, meaning that the stock is crossing a resistance level set by the last 115 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 ARE:

Alexandria Real Estate Equities, Inc., a real estate investment trust (REIT), engages in the ownership, operation, management, development, acquisition, and redevelopment of properties for the life sciences industry. The stock currently has a dividend yield of 3.2%. ARE has a PE ratio of 119.7. Currently there are 4 analysts that rate Alexandria Real Estate Equities a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Alexandria Real Estate Equities has been 443,400 shares per day over the past 30 days. Alexandria Real Estate Equities has a market cap of $6.7 billion and is part of the financial sector and real estate industry. The stock has a beta of 0.48 and a short float of 2.8% with 4.00 days to cover. Shares are up 5.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Alexandria Real Estate Equities as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • ARE's revenue growth has slightly outpaced the industry average of 9.8%. Since the same quarter one year prior, revenues rose by 12.0%. 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.
  • Compared to its closing price of one year ago, ARE's share price has jumped by 25.14%, exceeding the performance of the broader market during that same time frame. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • ALEXANDRIA R E EQUITIES INC's earnings per share declined by 45.6% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ALEXANDRIA R E EQUITIES INC reported lower earnings of $0.99 versus $1.60 in the prior year. This year, the market expects an improvement in earnings ($1.80 versus $0.99).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, ALEXANDRIA R E EQUITIES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ALEXANDRIA R E EQUITIES INC is rather low; currently it is at 24.47%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 12.42% significantly trails the industry average.

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