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Trade-Ideas: Comerica (CMA) 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 Comerica ( CMA) 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 Comerica as such a stock due to the following factors:

  • CMA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $65.3 million.
  • CMA has traded 1.2 million shares today.
  • CMA traded in a range 217.2% of the normal price range with a price range of $1.50.
  • CMA traded above its daily resistance level (quality: 49 days, meaning that the stock is crossing a resistance level set by the last 49 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.

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More details on CMA:

Comerica Incorporated, through its subsidiaries, provides financial products and services primarily in Texas, Arizona, California, Florida, and Michigan. The company operates in three segments: Business Bank, Retail Bank, and Wealth Management. The stock currently has a dividend yield of 1.7%. CMA has a PE ratio of 14.4. Currently there are 3 analysts that rate Comerica a buy, 10 analysts rate it a sell, and 12 rate it a hold.

The average volume for Comerica has been 1.6 million shares per day over the past 30 days. Comerica has a market cap of $7.3 billion and is part of the financial sector and banking industry. The stock has a beta of 1.51 and a short float of 4.2% with 5.02 days to cover. Shares are up 30% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Comerica as a buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins, growth in earnings per share, solid stock price performance, attractive valuation levels and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • The gross profit margin for COMERICA INC is currently very high, coming in at 93.55%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 21.96% is above that of the industry average.
  • COMERICA INC's earnings per share improvement from the most recent quarter was slightly positive. 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, COMERICA INC increased its bottom line by earning $2.68 versus $2.09 in the prior year. This year, the market expects an improvement in earnings ($2.86 versus $2.68).
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 28.89% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • CMA, with its decline in revenue, slightly underperformed the industry average of 3.8%. Since the same quarter one year prior, revenues slightly dropped by 4.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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