Trade-Ideas: AOL (AOL) Is Today's Unusual Social Activity 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 AOL ( AOL) as an unusual social activity candidate. In addition to specific proprietary factors, Trade-Ideas identified AOL as such a stock due to the following factors:

  • AOL has 20x the normal benchmarked social activity for this time of the day compared to its average of 20.10 mentions/day.
  • AOL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $227.7 million.

Identifying stocks with 'Unusual Social Activity' tends to be a valuable process for traders looking to capitalize on the 'talk of the town' stocks that are basking in far more attention from the StockTwits financial community than normal. Good press? Bad press? It ultimately doesn't matter if it's good or bad if you know how to trade around the sentiment. Certain hedge funds use such data for their proprietary algorithms and it is not uncommon to see shared social sentiment play itself out in a stock's price trend.

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More details on AOL:

AOL Inc. provides various digital brands, products, and services to consumers, advertisers, publishers, and subscribers worldwide. AOL has a PE ratio of 29. Currently there are 5 analysts that rate AOL a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for AOL has been 861,800 shares per day over the past 30 days. AOL has a market cap of $3.3 billion and is part of the technology sector and internet industry. The stock has a beta of 0.35 and a short float of 6.9% with 0.84 days to cover. Shares are down 7.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates AOL as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • AOL 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. During the past fiscal year, AOL INC increased its bottom line by earning $1.53 versus $1.12 in the prior year. This year, the market expects an improvement in earnings ($2.11 versus $1.53).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 65.5% when compared to the same quarter one year prior, rising from $36.00 million to $59.60 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 5.9%. Since the same quarter one year prior, revenues slightly increased by 4.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although AOL's debt-to-equity ratio of 0.19 is very low, it is currently higher than that of the industry average. To add to this, AOL has a quick ratio of 1.85, which demonstrates the ability of the company to cover short-term liquidity needs.

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