Trade-Ideas: Ensign Group (ENSG) Is Today's Strong And Under The Radar 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 Ensign Group ( ENSG) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Ensign Group as such a stock due to the following factors:

  • ENSG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $8.5 million
  • ENSG is making at least a new 3-day high
  • ENSG has a PE ratio of 34
  • ENSG is mentioned 1 times per day on StockTwits
  • ENSG has not yet been mentioned on StockTwits today
  • ENSG is currently in the upper 20% of its 1-year range
  • ENSG is in the upper 35% of its 20-day range
  • ENSG is in the upper 45% of its 5-day range
  • ENSG 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 ENSG:

The Ensign Group, Inc., through its subsidiaries, provides skilled nursing and rehabilitative care services in the United States. It operates through two segments, Transitional, Skilled and Assisted Living Services; and Home Health and Hospice Services. The stock currently has a dividend yield of 0.6%. ENSG has a PE ratio of 34. Currently there are five analysts that rate Ensign Group a buy, no analysts rate it a sell, and one rates it a hold.

The average volume for Ensign Group has been 125,000 shares per day over the past 30 days. Ensign Group has a market cap of $1.34 billion and is part of the health care sector and health services industry. The stock has a beta of 1.02 and a short float of 3.1% with 5.02 days to cover. Shares are up 19.4% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ensign Group as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in net income, growth in earnings per share and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 13.0%. Since the same quarter one year prior, revenues rose by 27.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ENSG's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, ENSG has a quick ratio of 1.55, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 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 12.2% when compared to the same quarter one year prior, going from $13.53 million to $15.17 million.
  • ENSIGN GROUP INC's earnings per share improvement from the most recent quarter was slightly positive. 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, ENSIGN GROUP INC increased its bottom line by earning $1.56 versus $1.13 in the prior year. This year, the market expects an improvement in earnings ($2.50 versus $1.56).
  • 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 79.42% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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