Pegasystems (PEGA) Is Today's Strong And Under The Radar 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 Pegasystems ( PEGA) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Pegasystems as such a stock due to the following factors:

  • PEGA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.9 million.
  • PEGA is making at least a new 3-day high.
  • PEGA has a PE ratio of 51.0.
  • PEGA is mentioned 0.74 times per day on StockTwits.
  • PEGA has not yet been mentioned on StockTwits today.
  • PEGA is currently in the upper 20% of its 1-year range.
  • PEGA is in the upper 35% of its 20-day range.
  • PEGA is in the upper 45% of its 5-day range.
  • PEGA is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

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More details on PEGA:

Pegasystems Inc. develops, markets, licenses, and supports software to automate complex and changing business processes in the United States and internationally. The stock currently has a dividend yield of 0.6%. PEGA has a PE ratio of 51.0. Currently there is 1 analyst that rates Pegasystems a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Pegasystems has been 178,100 shares per day over the past 30 days. Pegasystems has a market cap of $1.6 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.64 and a short float of 2.3% with 5.61 days to cover. Shares are up 3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Pegasystems 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, solid stock price performance, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 0.6%. Since the same quarter one year prior, revenues rose by 10.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • PEGA 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. To add to this, PEGA has a quick ratio of 1.61, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 29.99% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 29.2% when compared to the same quarter one year prior, rising from $15.56 million to $20.10 million.
  • Net operating cash flow has significantly increased by 159.37% to $1.62 million when compared to the same quarter last year. In addition, PEGASYSTEMS INC has also vastly surpassed the industry average cash flow growth rate of -14.60%.

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