Watch For Today's Momo Momentum Stock: Akamai Technologies (AKAM)

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 Akamai Technologies ( AKAM) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Akamai Technologies as such a stock due to the following factors:

  • AKAM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $152.6 million.
  • AKAM has a PE ratio of 40.1.
  • AKAM is currently in the upper 30% of its 1-year range.
  • AKAM is in the upper 25% of its 20-day range.
  • AKAM is in the upper 35% of its 5-day range.
  • AKAM is currently trading above yesterday's high.
  • AKAM has experienced a gap between today's open and yesterday's close of 0.7%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on AKAM:

Akamai Technologies, Inc. provides cloud services for delivering, optimizing, and securing online content and business applications in the United States and internationally. AKAM has a PE ratio of 40.1. Currently there are 16 analysts that rate Akamai Technologies a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Akamai Technologies has been 1.7 million shares per day over the past 30 days. Akamai has a market cap of $13.4 billion and is part of the technology sector and internet industry. The stock has a beta of 1.59 and a short float of 3.1% with 2.39 days to cover. Shares are up 19.2% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Akamai Technologies as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, increase in net income and reasonable valuation levels. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.8%. Since the same quarter one year prior, revenues rose by 16.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Although AKAM's debt-to-equity ratio of 0.20 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 3.97, which clearly demonstrates the ability to cover short-term cash needs.
  • AKAMAI TECHNOLOGIES INC has improved earnings per share by 7.5% 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. During the past fiscal year, AKAMAI TECHNOLOGIES INC increased its bottom line by earning $1.84 versus $1.61 in the prior year. This year, the market expects an improvement in earnings ($2.53 versus $1.84).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Internet Software & Services industry average. The net income increased by 6.8% when compared to the same quarter one year prior, going from $72.80 million to $77.75 million.

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