Trade-Ideas LLC identified Infosys ( INFY) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Infosys as such a stock due to the following factors:

  • INFY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $68.5 million.
  • INFY has traded 699,468 shares today.
  • INFY is trading at 3.33 times the normal volume for the stock at this time of day.
  • INFY crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in INFY with the Ticky from Trade-Ideas. See the FREE profile for INFY NOW at Trade-Ideas

More details on INFY:

Infosys Limited, together with its subsidiaries, provides business consulting, technology, engineering, and outsourcing services in North America, Europe, India, and internationally. The stock currently has a dividend yield of 3.2%. INFY has a PE ratio of 23. Currently there are 2 analysts that rate Infosys a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Infosys has been 4.1 million shares per day over the past 30 days. Infosys has a market cap of $40.8 billion and is part of the technology sector and computer software & services industry. Shares are up 3.6% year-to-date as of the close of trading on Friday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Infosys as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, increase in net income 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 18.4%. Since the same quarter one year prior, revenues slightly increased by 8.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • INFY has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.43, which clearly demonstrates the ability to cover short-term cash needs.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the IT Services industry average. The net income increased by 0.4% when compared to the same quarter one year prior, going from $522.00 million to $524.00 million.
  • INFOSYS LTD reported flat earnings per share in the most recent quarter. 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, INFOSYS LTD increased its bottom line by earning $0.88 versus $0.77 in the prior year. This year, the market expects an improvement in earnings ($0.89 versus $0.88).

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.