Strong And Under The Radar: Straight Path Communications (STRP)

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 Straight Path Communications ( STRP) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Straight Path Communications as such a stock due to the following factors:

  • STRP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.5 million.
  • STRP is making at least a new 3-day high.
  • STRP has a PE ratio of 59.
  • STRP is mentioned 0.23 times per day on StockTwits.
  • STRP has not yet been mentioned on StockTwits today.
  • STRP is currently in the upper 20% of its 1-year range.
  • STRP is in the upper 35% of its 20-day range.
  • STRP is in the upper 45% of its 5-day range.
  • STRP 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 STRP:

Straight Path Communications Inc., through its subsidiaries, holds, leases, and markets fixed wireless spectrum licenses in the United States. Its licenses include approximately 828 licenses of 39 gigahertz, as well as 133 licenses in the local multipoint distribution service band. STRP has a PE ratio of 59.

The average volume for Straight Path Communications has been 72,600 shares per day over the past 30 days. Straight Path has a market cap of $223.2 million and is part of the technology sector and telecommunications industry. Shares are up 5.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Straight Path Communications as a sell. The company's weaknesses can be seen in multiple areas, such as its premium valuation and weak operating cash flow.

Highlights from the ratings report include:
  • Net operating cash flow has declined marginally to -$0.65 million or 5.87% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • This stock has increased by 168.73% 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.
  • STRAIGHT PATH COMMUNICATIONS 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, STRAIGHT PATH COMMUNICATIONS turned its bottom line around by earning $0.15 versus -$0.10 in the prior year. For the next year, the market is expecting a contraction of 60.0% in earnings ($0.06 versus $0.15).
  • The gross profit margin for STRAIGHT PATH COMMUNICATIONS is rather high; currently it is at 51.89%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -9.96% is in-line with the industry average.

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