Trade-Ideas LLC identified Healthsouth ( HLS) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Healthsouth as such a stock due to the following factors:

  • HLS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $41.5 million.
  • HLS has traded 1.1 million shares today.
  • HLS traded in a range 211.8% of the normal price range with a price range of $2.54.
  • HLS traded above its daily resistance level (quality: 18 days, meaning that the stock is crossing a resistance level set by the last 18 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' 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 positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on HLS:

HealthSouth Corporation owns and operates inpatient rehabilitation hospitals in the United States. The company provides specialized rehabilitative treatment on an inpatient and outpatient basis. The stock currently has a dividend yield of 2.8%. HLS has a PE ratio of 18. Currently there are 6 analysts that rate Healthsouth a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Healthsouth has been 712,100 shares per day over the past 30 days. Healthsouth has a market cap of $3.0 billion and is part of the health care sector and health services industry. The stock has a beta of 0.34 and a short float of 6.4% with 4.67 days to cover. Shares are down 5.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Healthsouth as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, good cash flow from operations and increase in net income. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 10.1%. Since the same quarter one year prior, revenues rose by 30.4%. 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 return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Health Care Providers & Services industry and the overall market, HEALTHSOUTH CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Health Care Providers & Services industry average. The net income increased by 1.0% when compared to the same quarter one year prior, going from $50.20 million to $50.70 million.
  • Net operating cash flow has increased to $163.30 million or 16.97% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 1.95%.
  • The debt-to-equity ratio is very high at 4.48 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 3.01, which shows the ability to cover short-term cash needs.

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