Strong And Under The Radar Today: Virtusa (VRTU)

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

  • VRTU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $6.6 million.
  • VRTU is making at least a new 3-day high.
  • VRTU has a PE ratio of 35.
  • VRTU is mentioned 1.58 times per day on StockTwits.
  • VRTU has not yet been mentioned on StockTwits today.
  • VRTU is currently in the upper 20% of its 1-year range.
  • VRTU is in the upper 35% of its 20-day range.
  • VRTU is in the upper 45% of its 5-day range.
  • VRTU 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 VRTU:

Virtusa Corporation operates as an information technology (IT) services company. VRTU has a PE ratio of 35. Currently there are 6 analysts that rate Virtusa a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Virtusa has been 143,600 shares per day over the past 30 days. Virtusa has a market cap of $1.5 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 2.14 and a short float of 2.1% with 4.60 days to cover. Shares are up 20.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Virtusa 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. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 22.5%. Since the same quarter one year prior, revenues rose by 13.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • VRTU's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 5.21, which clearly demonstrates the ability to cover short-term cash needs.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 39.13% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • VIRTUSA CORP has improved earnings per share by 11.4% 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, VIRTUSA CORP increased its bottom line by earning $1.44 versus $1.27 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $1.44).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the IT Services industry. The net income increased by 14.9% when compared to the same quarter one year prior, going from $10.05 million to $11.55 million.

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