Trade-Ideas LLC identified Discovery Communications ( DISCK) 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 Discovery Communications as such a stock due to the following factors:

  • DISCK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $40.4 million.
  • DISCK has traded 242,687 shares today.
  • DISCK traded in a range 212.8% of the normal price range with a price range of $1.42.
  • DISCK traded below its daily resistance level (quality: 14 days, meaning that the stock is crossing a resistance level set by the last 14 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 DISCK:

Discovery Communications, Inc. operates as a media company. The company operates through U.S. Networks; International Networks; and Education and Other segments. DISCK has a PE ratio of 8. Currently there are no analysts that rate Discovery Communications a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Discovery Communications has been 2.2 million shares per day over the past 30 days. Discovery has a market cap of $7.1 billion and is part of the services sector and media industry. The stock has a beta of 1.69 and a short float of 2% with 3.30 days to cover. Shares are down 23.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Discovery Communications as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.4%. Since the same quarter one year prior, revenues slightly increased by 2.7%. 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.
  • DISCOVERY COMMUNICATIONS INC's earnings per share declined by 19.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DISCOVERY COMMUNICATIONS INC increased its bottom line by earning $1.67 versus $1.34 in the prior year. This year, the market expects an improvement in earnings ($5.02 versus $1.67).
  • Looking at the price performance of DISCK's shares over the past 12 months, there is not much good news to report: the stock is down 30.75%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Media industry average. The net income has decreased by 24.5% when compared to the same quarter one year ago, dropping from $379.00 million to $286.00 million.

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