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 Edwards Lifesciences ( EW) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Edwards Lifesciences as such a stock due to the following factors:

  • EW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $147.6 million.
  • EW has traded 522,962 shares today.
  • EW traded in a range 249.2% of the normal price range with a price range of $7.00.
  • EW traded below its daily resistance level (quality: 1 day, meaning that the stock is crossing a resistance level set by the last 1 calendar day. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' 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 negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on EW:

Edwards Lifesciences Corporation provides products and technologies to treat structural heart disease and critically ill patients worldwide. EW has a PE ratio of 19. Currently there are 12 analysts that rate Edwards Lifesciences a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Edwards Lifesciences has been 1.1 million shares per day over the past 30 days. Edwards Lifesciences has a market cap of $16.4 billion and is part of the health care sector and health services industry. The stock has a beta of 0.45 and a short float of 1.8% with 1.93 days to cover. Shares are up 22.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Edwards Lifesciences as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. 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 significantly exceeded that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income increased by 104.6% when compared to the same quarter one year prior, rising from $60.30 million to $123.40 million.
  • EW's revenue growth trails the industry average of 26.3%. Since the same quarter one year prior, revenues slightly increased by 9.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • EW's debt-to-equity ratio is very low at 0.27 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 4.23, which clearly demonstrates the ability to cover short-term cash needs.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, EDWARDS LIFESCIENCES CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for EDWARDS LIFESCIENCES CORP is currently very high, coming in at 79.67%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 20.90% significantly outperformed against the industry average.

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