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Trade-Ideas: Southern Copper Corporation (SCCO) 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 Southern Copper Corporation ( SCCO) 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 Southern Copper Corporation as such a stock due to the following factors:

  • SCCO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $44.8 million.
  • SCCO has traded 916,298 shares today.
  • SCCO traded in a range 212.2% of the normal price range with a price range of $1.19.
  • SCCO traded above its daily resistance level (quality: 19 days, meaning that the stock is crossing a resistance level set by the last 19 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 SCCO with the Ticky from Trade-Ideas. See the FREE profile for SCCO NOW at Trade-Ideas

More details on SCCO:

Southern Copper Corporation engages in mining, exploring, producing, smelting, and refining copper and other minerals in Peru, Mexico, and Chile. The stock currently has a dividend yield of 11.8%. SCCO has a PE ratio of 14.7. Currently there are 2 analysts that rate Southern Copper Corporation a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Southern Copper Corporation has been 1.8 million shares per day over the past 30 days. Southern Copper has a market cap of $23.7 billion and is part of the basic materials sector and metals & mining industry. The stock has a beta of 1.45 and a short float of 5.9% with 5.91 days to cover. Shares are down 25.6% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Southern Copper Corporation as a hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow.

Highlights from the ratings report include:

  • 49.49% is the gross profit margin for SOUTHERN COPPER CORP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, SCCO's net profit margin of 26.43% significantly outperformed against the industry.
  • SCCO's debt-to-equity ratio of 0.81 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 4.37 is very high and demonstrates very strong liquidity.
  • SCCO, with its decline in revenue, underperformed when compared the industry average of 1.8%. Since the same quarter one year prior, revenues fell by 15.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 33.9% when compared to the same quarter one year ago, falling from $563.55 million to $372.74 million.
  • Net operating cash flow has decreased to $305.94 million or 18.86% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, SOUTHERN COPPER CORP has marginally lower results.

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