Is The Stock A Good Investment? – The Gap, Inc. (NYSE: GPS)

Wall Street capped 2017 with a loss, weighed down by a broad slide in light trading ahead of the New Year’s holiday.

Technology companies, banks and health care stocks accounted for much of the market’s decline. Energy stocks also fell, even as the price of US crude oil surged to its highest level in more than two years.

Despite the downbeat end to the week, the US stock market finished 2017 with its strongest year since 2013.

The Standard & Poor’s 500 index, the broadest measure of the stock market, gained 19.4 per cent for the year, more than double its gain in 2016. Counting dividends, the total return was 21.8 per cent, as of late Friday.

The Dow Jones industrial average ended the year with a 25.1 per cent gain, setting 71 all-time highs along the way.

The Nasdaq composite notched the biggest gain, a boost of 28.2 per cent, while the Russell 2000 index of smaller-company stocks closed out 2017 with a gain of 13.1 per cent.

“It’s been the year that surprised everybody,” said J.J. Kinahan, chief market strategist at TD Ameritrade. “It was truly buy-on-the-dip, and that paid off better than anyone possibly expected.”

On Friday, many shareholders opted to pocket some of their gains, especially in technology stocks, which led the market with a gain of 36.9 per cent. Chipmaker KLA-Tencor was among the sector’s big decliners, dropping $2.78, or 2.6 per cent, to $105.07.

Traders also sold off health care and financials stocks, both of which rose 20 per cent this year. Health care management company Centene fell $2.02, or 2 per cent, to $100.88, while SunTrust Banks gave up 85 cents, or 1.3 per cent, to $64.59. (Source: AP)

Top Pick for Tuesday: The Gap, Inc. (NYSE: GPS)

The Gap, Inc. (NYSE: GPS) has grabbed attention from the analysts when it experienced a change of -1.10% in the last trading session to close at $34.06. A total of 2,189,326 shares exchanged hands during the intra-day trade contrast with its average trading volume of 5.46M shares, while its relative volume stands at 0.40. Relative volume is the comparison of current volume to average volume for the same time of day, and it’s displayed as a ratio. If RVOL is less than 1 it is not In Play on this trading day and Investors may decide not to trade it.  If RVOL is above 2 it is In Play and this is more evidence Investors ought to be in the name.  When stocks are *very* In Play one can see a RVOL of 5 and above.  The higher the RVOL the more In Play the stock is.

Day traders strive to make money by exploiting minute price movements in individual assets (usually stocks, though currencies, futures, and options are traded as well), usually leveraging large amounts of capital to do so, therefore they trade on Stocks in Play. In Play Stocks are volatile enough to produce good risk and reward trading opportunities for both bull and bear traders intraday. Most company stocks have very little volatility. They generally move extremely slowly and they only produce big price swings when the company produces good or bad trading results, which may only happen a couple of times a year at best.

In deciding what to focus on – in a stock, say – a typical day trader looks for three things: liquidity, volatility and trading volume. Liquidity allows an investor to enter and exit a stock at a good price (i.e. tight spreads, or the difference between the bid and ask price of a stock, and low slippage, or the difference between the predictable price of a trade and the actual price). If a stock does not have good liquidity then it may take some time before a broker is able to negotiate a deal to buy or sell a stock and the broker may not be able to get the sell or buy price that the trader is looking for. This is a problem for day traders and it could mean the difference between a profitable and non-profitable trade.

Traders have different rules for what constitutes liquidity and a good guide is the volume of trades and volume of shares that are traded each day. 100,000 shares traded per day would be a minimum for most traders and some require 1,000,000.

Trading volume is a gauge of how many times a stock is bought and sold in a given time period (most commonly, within a day of trading, known as the average daily trading volume – ADTV). A high degree of volume indicates a lot of interest in a stock. Often, a boost in the volume of a stock is a harbinger of a price jump, either up or down.

Volatility is simply a measure of the predictable daily price range—the range in which a day trader operates. More volatility means greater profit or loss. After a recent check, The Gap, Inc. (NYSE: GPS) stock is found to be 1.76% volatile for the week, while 2.42% volatility is recorded for the month.

Technical’s Snapshot:

The stock has a market cap of $13.39B and the number of outstanding shares has been calculated 393.19M. Based on a recent bid, its distance from 20 days simple moving average is 0.67%, and its distance from 50 days simple moving average is 13.28% while it has a distance of 31.62% from the 200 days simple moving average. The company’s distance from 52-week high price is -3.35% and the current price is 62.04% away from 52-week low price. The company has Relative Strength Index (RSI 14) of 62.61 together with Average True Range (ATR 14) of 0.82.

Stock’s Valuation:

Past 5 years growth of GPS observed at 1.60%, and for the next five years the analysts that follow this company is expecting its growth at 7.20%. The stock’s price to sales ratio for trailing twelve months is 0.86 and price to book ratio for the most recent quarter is 4.41, whereas price to cash per share for the most recent quarter are 9.90. Its quick ratio for the most recent quarter is 0.80. Analysts mean recommendation for the stock is 2.90. This number is based on a 1 to 5 scale where 1 indicates a Strong Buy recommendation while 5 represents a Strong Sell.

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Donald S. Wiggins is passionate about business and finance news with over 5 years in the industry starting as a writer working his way up into senior positions. He is the driving force behind with a vision to broaden the company’s readership throughout 2016. Wiggins is an editor and reporter of “Services” Category.