Surgical Care Affiliates (SCAI) 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 Surgical Care Affiliates ( SCAI) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Surgical Care Affiliates as such a stock due to the following factors:

  • SCAI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.8 million.
  • SCAI is making at least a new 3-day high.
  • SCAI has a PE ratio of 36.7.
  • SCAI is mentioned 1.19 times per day on StockTwits.
  • SCAI has not yet been mentioned on StockTwits today.
  • SCAI is currently in the upper 20% of its 1-year range.
  • SCAI is in the upper 35% of its 20-day range.
  • SCAI is in the upper 45% of its 5-day range.
  • SCAI 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 SCAI:

Surgical Care Affiliates, Inc., together with its subsidiaries, owns and operates a network of multi-specialty ambulatory surgery centers (ASCs) and surgical hospitals in the United States. SCAI has a PE ratio of 36.7. Currently there are 3 analysts that rate Surgical Care Affiliates a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Surgical Care Affiliates has been 226,400 shares per day over the past 30 days. Surgical Care Affiliates has a market cap of $1.5 billion and is part of the health care sector and health services industry. Shares are up 12.4% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Surgical Care Affiliates as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, premium valuation and poor profit margins.

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 2.83 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, SCAI maintains a poor quick ratio of 0.82, which illustrates the inability to avoid short-term cash problems.
  • The gross profit margin for SURGICAL CARE AFFILIATES INC is currently lower than what is desirable, coming in at 30.80%. Regardless of SCAI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SCAI's net profit margin of 7.54% compares favorably to the industry average.
  • This stock has increased by 28.31% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.
  • SURGICAL CARE AFFILIATES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, SURGICAL CARE AFFILIATES INC turned its bottom line around by earning $1.03 versus -$0.91 in the prior year. This year, the market expects an improvement in earnings ($2.21 versus $1.03).

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