Strong And Under The Radar: HealthStream (HSTM)

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

  • HSTM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.9 million.
  • HSTM is making at least a new 3-day high.
  • HSTM has a PE ratio of 77.
  • HSTM is mentioned 1.10 times per day on StockTwits.
  • HSTM has not yet been mentioned on StockTwits today.
  • HSTM is currently in the upper 20% of its 1-year range.
  • HSTM is in the upper 35% of its 20-day range.
  • HSTM is in the upper 45% of its 5-day range.
  • HSTM 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 HSTM:

HealthStream, Inc. provides software-as-a-service (SaaS) based workforce development solutions and research/patient experience solutions in the United States. HSTM has a PE ratio of 77. Currently there are 6 analysts that rate HealthStream a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for HealthStream has been 156,000 shares per day over the past 30 days. HealthStream has a market cap of $861.0 million and is part of the technology sector and computer software & services industry. The stock has a beta of 1.51 and a short float of 5.3% with 8.01 days to cover. Shares are up 5.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates HealthStream as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and reasonable valuation levels. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Health Care Technology industry average. The net income increased by 39.7% when compared to the same quarter one year prior, rising from $1.95 million to $2.72 million.
  • HSTM's revenue growth trails the industry average of 42.7%. Since the same quarter one year prior, revenues rose by 23.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • HSTM's debt-to-equity ratio is very low at 0.16 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.15, which illustrates the ability to avoid short-term cash problems.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. 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.

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