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Trade-Ideas: Chico's FAS (CHS) Is Today's "Barbarian At The Gate" Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Chico's FAS (CHS) 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 Chico's FAS as such a stock due to the following factors:

  • CHS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $33.2 million.
  • CHS has traded 716,630 shares today.
  • CHS traded in a range 264.1% of the normal price range with a price range of $0.83.
  • CHS traded above its daily resistance level (quality: 21 days, meaning that the stock is crossing a resistance level set by the last 21 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.

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

More details on CHS:

Chico's FAS, Inc., together with its subsidiaries, operates as a specialty retailer of private branded, casual-to-dressy clothing, intimates, complementary accessories, and other non-clothing items in the United States. The stock currently has a dividend yield of 1.4%. CHS has a PE ratio of 14.6. Currently there are 6 analysts that rate Chico's FAS a buy, no analysts rate it a sell, and 10 rate it a hold.

The average volume for Chico's FAS has been 2.3 million shares per day over the past 30 days. Chico's FAS has a market cap of $2.5 billion and is part of the services sector and retail industry. The stock has a beta of 1.32 and a short float of 3.1% with 2.98 days to cover. Shares are down 15.6% year to date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Chico's FAS 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, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • CHS's revenue growth trails the industry average of 23.8%. Since the same quarter one year prior, revenues slightly increased by 3.0%. 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.
  • CHS 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.
  • CHICOS FAS INC' earnings per share from the most recent quarter came in slightly below the year earlier 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, CHICOS FAS INC increased its bottom line by earning $1.08 versus $0.82 in the prior year. This year, the market expects an improvement in earnings ($1.15 versus $1.08).
  • 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 Specialty Retail industry and the overall market on the basis of return on equity, CHICOS FAS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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