Trade-Ideas LLC identified Computer ( CSC) 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 Computer as such a stock due to the following factors:

  • CSC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $84.2 million.
  • CSC has traded 128,762 shares today.
  • CSC traded in a range 227.1% of the normal price range with a price range of $1.89.
  • CSC traded below its daily resistance level (quality: 5 days, meaning that the stock is crossing a resistance level set by the last 5 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 CSC:

Computer Sciences Corporation provides information technology (IT) and professional services and solutions primarily in North America, Europe, Asia, and Australia. The company operates through Global Business Services, Global Infrastructure Services, and North American Public Sector segments. The stock currently has a dividend yield of 1.4%. CSC has a PE ratio of 27. Currently there are 4 analysts that rate Computer a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Computer has been 1.1 million shares per day over the past 30 days. Computer has a market cap of $9.3 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.69 and a short float of 4.9% with 5.29 days to cover. Shares are up 8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:
  • The debt-to-equity ratio is somewhat low, currently at 0.88, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.22, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has increased to $324.00 million or 18.68% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -10.35%.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • COMPUTER SCIENCES CORP has improved earnings per share by 10.7% 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, COMPUTER SCIENCES CORP reported lower earnings of $0.04 versus $5.71 in the prior year. This year, the market expects an improvement in earnings ($4.94 versus $0.04).
  • Despite the weak revenue results, CSC has outperformed against the industry average of 27.2%. Since the same quarter one year prior, revenues fell by 14.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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