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Trade-Ideas: Albemarle (ALB) 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 Albemarle (ALB) 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 Albemarle as such a stock due to the following factors:

  • ALB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $55.9 million.
  • ALB has traded 553,435 shares today.
  • ALB traded in a range 264% of the normal price range with a price range of $2.63.
  • ALB traded above its daily resistance level (quality: 135 days, meaning that the stock is crossing a resistance level set by the last 135 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 ALB:

Albemarle Corporation develops, manufactures, and markets engineered specialty chemicals. The stock currently has a dividend yield of 1.5%. ALB has a PE ratio of 17.5. Currently there are 4 analysts that rate Albemarle a buy, no analysts rate it a sell, and 11 rate it a hold.

The average volume for Albemarle has been 761,800 shares per day over the past 30 days. Albemarle has a market cap of $5.1 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 1.79 and a short float of 2.8% with 2.96 days to cover. Shares are up 0.6% year to date as of the close of trading on Friday.

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 Albemarle as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and notable return on equity. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:

  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 65.2% when compared to the same quarter one year prior, rising from $50.09 million to $82.74 million.
  • Net operating cash flow has increased to $80.20 million or 30.69% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -2.04%.
  • ALB's debt-to-equity ratio of 0.80 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. Despite the fact that ALB's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.92 is high and demonstrates strong liquidity.
  • 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 Chemicals industry and the overall market on the basis of return on equity, ALBEMARLE CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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