Autohome (ATHM) Is Today's Water-Logged And Getting Wetter 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.

Trade-Ideas LLC identified Autohome ( ATHM) 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 Autohome as such a stock due to the following factors:

  • ATHM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $91.6 million.
  • ATHM has traded 288,396 shares today.
  • ATHM traded in a range 216.1% of the normal price range with a price range of $5.38.
  • ATHM traded below its daily resistance level (quality: 5 days, meaning that the stock is crossing a resistance level set by the last 5 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 ATHM:

Autohome Inc. operates as an online destination for automobile consumers in the People's Republic of China. ATHM has a PE ratio of 47.4. Currently there are 5 analysts that rate Autohome a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Autohome has been 1.1 million shares per day over the past 30 days. Autohome has a market cap of $6.1 billion and is part of the technology sector and internet industry. Shares are up 51.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Autohome as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, notable return on equity and robust revenue growth. However, as a counter to these strengths, we find that the stock itself is trading at a premium valuation.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 59.09% and other important driving factors, this stock has surged by 59.35% over the past year, outperforming the rise in the S&P 500 Index during the same period.
  • Compared to other companies in the Internet Software & Services industry and the overall market, AUTOHOME INC -ADR's return on equity exceeds that of both the industry average and the S&P 500.
  • ATHM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.27, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for AUTOHOME INC -ADR is currently very high, coming in at 84.89%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 33.78% significantly outperformed against the industry average.

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