Trade-Ideas: Garmin (GRMN) 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 Garmin (GRMN) 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 Garmin as such a stock due to the following factors:
- GRMN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $51.9 million.
- GRMN has traded 1.7 million shares today.
- GRMN traded in a range 347% of the normal price range with a price range of $2.73.
- GRMN traded above its daily resistance level (quality: 232 days, meaning that the stock is crossing a resistance level set by the last 232 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 GRMN with the Ticky from Trade-Ideas. See the FREE profile for GRMN NOW at Trade-IdeasMore details on GRMN: Garmin Ltd., together with its subsidiaries, designs, develops, manufactures, and markets global positioning system (GPS) enabled products and other navigation, communication, and information products for the automotive/mobile, outdoor, fitness, marine, and general aviation markets worldwide. The stock currently has a dividend yield of 4.5%. GRMN has a PE ratio of 15.0. Currently there are 5 analysts that rate Garmin a buy, 1 analyst rates it a sell, and 5 rate it a hold.The average volume for Garmin has been 1.1 million shares per day over the past 30 days. Garmin has a market cap of $8.4 billion and is part of the technology sector and electronics industry. The stock has a beta of 0.88 and a short float of 10.6% with 9.45 days to cover. Shares are down 0.8% year to date as of the close of trading on Wednesday.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 Garmin 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 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:
- GRMN 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. To add to this, GRMN has a quick ratio of 1.92, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for GARMIN LTD is rather high; currently it is at 56.90%. Regardless of GRMN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GRMN's net profit margin of 24.76% significantly outperformed against the industry.
- GRMN, with its decline in revenue, underperformed when compared the industry average of 22.1%. Since the same quarter one year prior, revenues slightly dropped by 3.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- GARMIN LTD's earnings per share declined by 7.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, GARMIN LTD increased its bottom line by earning $2.77 versus $2.67 in the prior year. For the next year, the market is expecting a contraction of 13.7% in earnings ($2.39 versus $2.77).
- In its most recent trading session, GRMN has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- You can view the full Garmin Ratings Report.
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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