Trade-Ideas LLC identified Health Net ( HNT) 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 Health Net as such a stock due to the following factors:

  • HNT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $40.6 million.
  • HNT has traded 338,830 shares today.
  • HNT traded in a range 235.2% of the normal price range with a price range of $2.86.
  • HNT traded below its daily resistance level (quality: 110 days, meaning that the stock is crossing a resistance level set by the last 110 calendar days. 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 HNT:

Health Net, Inc. provides managed health care services through health plans and government-sponsored managed care plans in the United States. It operates through Western Region Operations and Government Contracts segments. HNT has a PE ratio of 6. Currently there are 2 analysts that rate Health Net a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Health Net has been 1.3 million shares per day over the past 30 days. Health Net has a market cap of $5.0 billion and is part of the health care sector and health services industry. The stock has a beta of 0.58 and a short float of 1.2% with 1.35 days to cover. Shares are up 17.6% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Health Net 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 and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.6%. Since the same quarter one year prior, revenues rose by 21.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.33, which illustrates the ability to avoid short-term cash problems.
  • Compared to its closing price of one year ago, HNT's share price has jumped by 38.06%, exceeding the performance of the broader market during that same time frame. 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.
  • HEALTH NET INC's earnings per share declined by 49.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, HEALTH NET INC reported lower earnings of $1.80 versus $2.12 in the prior year. This year, the market expects an improvement in earnings ($3.33 versus $1.80).
  • The gross profit margin for HEALTH NET INC is rather low; currently it is at 15.91%. Regardless of HNT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.40% trails the industry average.

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