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Trade-Ideas: Nordstrom (JWN) 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 Nordstrom ( JWN) 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 Nordstrom as such a stock due to the following factors:

  • JWN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $115.9 million.
  • JWN has traded 828,623 shares today.
  • JWN traded in a range 204.8% of the normal price range with a price range of $1.54.
  • JWN traded above its daily resistance level (quality: 11 days, meaning that the stock is crossing a resistance level set by the last 11 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 JWN with the Ticky from Trade-Ideas. See the FREE profile for JWN NOW at Trade-Ideas

More details on JWN:

Nordstrom, Inc., a fashion specialty retailer, offers apparel, shoes, cosmetics, and accessories for women, men, and children in the United States. It operates in two segments, Retail and Credit. The Retail segment offers a selection of brand name and private label merchandise. The stock currently has a dividend yield of 2.1%. JWN has a PE ratio of 15.0. Currently there are 10 analysts that rate Nordstrom a buy, 2 analysts rate it a sell, and 11 rate it a hold.

The average volume for Nordstrom has been 1.5 million shares per day over the past 30 days. Nordstrom has a market cap of $11.0 billion and is part of the services sector and retail industry. The stock has a beta of 1.17 and a short float of 4.5% with 3.12 days to cover. Shares are up 5.4% 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 Nordstrom as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, impressive record of earnings per share growth, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:

  • JWN's revenue growth has slightly outpaced the industry average of 5.3%. Since the same quarter one year prior, revenues slightly increased by 6.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • NORDSTROM INC has improved earnings per share by 24.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, NORDSTROM INC increased its bottom line by earning $3.56 versus $3.15 in the prior year. This year, the market expects an improvement in earnings ($3.68 versus $3.56).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Multiline Retail industry average. The net income increased by 17.9% when compared to the same quarter one year prior, going from $156.00 million to $184.00 million.
  • 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 Multiline Retail industry and the overall market, NORDSTROM INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 81.22% to $386.00 million when compared to the same quarter last year. In addition, NORDSTROM INC has also vastly surpassed the industry average cash flow growth rate of -2.69%.

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