Trade-Ideas: Diamond Resorts International (DRII) 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 Diamond Resorts International ( DRII) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Diamond Resorts International as such a stock due to the following factors:

  • DRII has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.8 million.
  • DRII is making at least a new 3-day high.
  • DRII has a PE ratio of 35.1.
  • DRII is mentioned 1.32 times per day on StockTwits.
  • DRII has not yet been mentioned on StockTwits today.
  • DRII is currently in the upper 20% of its 1-year range.
  • DRII is in the upper 35% of its 20-day range.
  • DRII is in the upper 45% of its 5-day range.
  • DRII 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 DRII:

Diamond Resorts International, Inc. operates in the hospitality and vacation ownership industry in the United States, Hawaii, Canada, Mexico, the Caribbean, Central America, South America, Europe, Asia, Australia, New Zealand, and Africa. DRII has a PE ratio of 35.1. Currently there are 2 analysts that rate Diamond Resorts International a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Diamond Resorts International has been 517,500 shares per day over the past 30 days. Diamond Resorts International has a market cap of $2.4 billion and is part of the services sector and leisure industry. Shares are up 16.9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Diamond Resorts International as a sell. Among the areas we feel are negative, one of the most important has been very high debt management risk by most measures.

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 4.02 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • This stock has increased by 71.08% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • DIAMOND RESORTS INTL 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, DIAMOND RESORTS INTL turned its bottom line around by earning $0.76 versus -$0.04 in the prior year. This year, the market expects an improvement in earnings ($1.69 versus $0.76).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 85.4% when compared to the same quarter one year prior, rising from $14.01 million to $25.98 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, DIAMOND RESORTS INTL's return on equity significantly exceeds that of both the industry average and the S&P 500.

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