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Trade-Ideas: Allegheny Technologies (ATI) Is Today's "Barbarian At The Gate" Stock

Stock quotes in this article: ATI

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 Allegheny Technologies ( ATI) 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 Allegheny Technologies as such a stock due to the following factors:

  • ATI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $26.3 million.
  • ATI has traded 2.7 million shares today.
  • ATI traded in a range 209.9% of the normal price range with a price range of $1.51.
  • ATI traded above its daily resistance level (quality: 167 days, meaning that the stock is crossing a resistance level set by the last 167 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 ATI with the Ticky from Trade-Ideas. See the FREE profile for ATI NOW at Trade-Ideas

More details on ATI:

Allegheny Technologies Incorporated engages in the production and sale of specialty metals worldwide. It operates in three segments: High Performance Metals, Flat-Rolled Products, and Engineered Products. The stock currently has a dividend yield of 2.5%. ATI has a PE ratio of 50.9. Currently there are 4 analysts that rate Allegheny Technologies a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Allegheny Technologies has been 1.4 million shares per day over the past 30 days. Allegheny has a market cap of $3.1 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 2.13 and a short float of 10.1% with 12.94 days to cover. Shares are down 6.2% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Allegheny Technologies as a hold. Among the primary strengths of the company is its generally strong cash flow from operations. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

Highlights from the ratings report include:

  • Net operating cash flow has increased to $115.40 million or 47.94% when compared to the same quarter last year. In addition, ALLEGHENY TECHNOLOGIES INC has also vastly surpassed the industry average cash flow growth rate of -11.74%.
  • ATI, with its decline in revenue, underperformed when compared the industry average of 5.2%. Since the same quarter one year prior, revenues fell by 16.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.59, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that ATI's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.61 is low and demonstrates weak liquidity.
  • ALLEGHENY TECHNOLOGIES INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, ALLEGHENY TECHNOLOGIES INC reported lower earnings of $1.42 versus $1.98 in the prior year. For the next year, the market is expecting a contraction of 85.3% in earnings ($0.21 versus $1.42).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 92.2% when compared to the same quarter one year ago, falling from $56.40 million to $4.40 million.

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