Barbarian At The Gate: Cree (CREE)
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 Cree (CREE) 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 Cree as such a stock due to the following factors:
- CREE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $110.6 million.
- CREE has traded 1.3 million shares today.
- CREE traded in a range 206.5% of the normal price range with a price range of $3.02.
- CREE traded above its daily resistance level (quality: 24 days, meaning that the stock is crossing a resistance level set by the last 24 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 CREE with the Ticky from Trade-Ideas. See the FREE profile for CREE NOW at Trade-IdeasMore details on CREE: Cree, Inc. develops, manufactures, and sells lighting-class light emitting diode (LED), lighting, and semiconductor products for power and radio-frequency (RF) applications in the United States, China, Europe, South Korea, Japan, Malaysia, and Taiwan. CREE has a PE ratio of 66.5. Currently there are 6 analysts that rate Cree a buy, 2 analysts rate it a sell, and 9 rate it a hold.The average volume for Cree has been 2.6 million shares per day over the past 30 days. Cree has a market cap of $6.8 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.58 and a short float of 11% with 5.97 days to cover. Shares are up 66.4% 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 Cree as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow.Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 9.3%. Since the same quarter one year prior, revenues rose by 23.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CREE has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.02, which clearly demonstrates the ability to cover short-term cash needs.
- CREE INC reported significant earnings per share improvement 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 year. We feel that this trend should continue. During the past fiscal year, CREE INC increased its bottom line by earning $0.74 versus $0.38 in the prior year. This year, the market expects an improvement in earnings ($1.65 versus $0.74).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 89.2% when compared to the same quarter one year prior, rising from $16.12 million to $30.50 million.
- 46.79% is the gross profit margin for CREE INC which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CREE's net profit margin of 7.79% significantly trails the industry average.
- You can view the full Cree Ratings Report.
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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