Trade-Ideas: Universal Health Services (UHS) Is Today's

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 Universal Health Services ( UHS) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Universal Health Services as such a stock due to the following factors:

  • UHS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $94.1 million.
  • UHS has traded 691,073 shares today.
  • UHS traded in a range 201.6% of the normal price range with a price range of $4.35.
  • UHS traded above its daily resistance level (quality: 532 days, meaning that the stock is crossing a resistance level set by the last 532 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on UHS:

Universal Health Services, Inc., through its subsidiaries, owns and operates acute care hospitals, behavioral health centers, surgical hospitals, ambulatory surgery centers, and radiation oncology centers. The stock currently has a dividend yield of 0.3%. UHS has a PE ratio of 22. Currently there are 12 analysts that rate Universal Health Services a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for Universal Health Services has been 720,900 shares per day over the past 30 days. Universal Health Services has a market cap of $11.6 billion and is part of the health care sector and health services industry. The stock has a beta of 1.45 and a short float of 1.4% with 1.84 days to cover. Shares are up 14.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:
  • UHS's revenue growth has slightly outpaced the industry average of 13.2%. Since the same quarter one year prior, revenues rose by 14.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.80, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.13, which illustrates the ability to avoid short-term cash problems.
  • Powered by its strong earnings growth of 25.36% and other important driving factors, this stock has surged by 37.21% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, UHS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • UNIVERSAL HEALTH SVCS INC has improved earnings per share by 25.4% 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, UNIVERSAL HEALTH SVCS INC increased its bottom line by earning $5.42 versus $5.13 in the prior year. This year, the market expects an improvement in earnings ($6.55 versus $5.42).
  • 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 Health Care Providers & Services industry average. The net income increased by 26.2% when compared to the same quarter one year prior, rising from $138.08 million to $174.30 million.

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