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Trade-Ideas: Franklin Resources (BEN) 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 Franklin Resources ( BEN) 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 Franklin Resources as such a stock due to the following factors:

  • BEN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $96.1 million.
  • BEN has traded 63,778 shares today.
  • BEN traded in a range 315.5% of the normal price range with a price range of $3.23.
  • BEN traded above its daily resistance level (quality: 29 days, meaning that the stock is crossing a resistance level set by the last 29 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 BEN with the Ticky from Trade-Ideas. See the FREE profile for BEN NOW at Trade-Ideas

More details on BEN:

Franklin Resources Inc. is a publicly owned asset management holding company. The firm provides its services to individuals, institutions, pension plans, trusts, and partnerships. It manages, through its subsidiary, separate client-focused equity, fixed income, and balanced portfolios. The stock currently has a dividend yield of 0.8%. BEN has a PE ratio of 14.0. Currently there are 9 analysts that rate Franklin Resources a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Franklin Resources has been 3.0 million shares per day over the past 30 days. Franklin has a market cap of $29.6 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.53 and a short float of 1.8% with 3.61 days to cover. Shares are up 11.3% year to date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Franklin Resources as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and solid stock price performance. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • BEN's revenue growth has slightly outpaced the industry average of 12.7%. Since the same quarter one year prior, revenues rose by 16.4%. Growth in the company's revenue appears to have helped boost the 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. In comparison to the other companies in the Capital Markets industry and the overall market, FRANKLIN RESOURCES INC's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • 38.53% is the gross profit margin for FRANKLIN RESOURCES INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 26.43% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 85.48% to $755.80 million when compared to the same quarter last year. In addition, FRANKLIN RESOURCES INC has also vastly surpassed the industry average cash flow growth rate of 8.52%.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

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