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Barbarian At The Gate: Genuine Parts Company (GPC)

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 Genuine Parts Company ( GPC) 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 Genuine Parts Company as such a stock due to the following factors:

  • GPC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $67.6 million.
  • GPC has traded 358,585 shares today.
  • GPC traded in a range 240.7% of the normal price range with a price range of $2.23.
  • GPC traded above its daily resistance level (quality: 119 days, meaning that the stock is crossing a resistance level set by the last 119 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 GPC:

Genuine Parts Company distributes automotive replacement parts, industrial replacement parts, office products, and electrical/electronic materials in the United States, Puerto Rico, the Dominican Republic, Mexico, and Canada. The stock currently has a dividend yield of 2.6%. GPC has a PE ratio of 18.6. Currently there are 2 analysts that rate Genuine Parts Company a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Genuine Parts Company has been 707,300 shares per day over the past 30 days. Genuine Parts has a market cap of $12.8 billion and is part of the services sector and wholesale industry. The stock has a beta of 0.64 and a short float of 4.7% with 9.38 days to cover. Shares are up 29.5% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Genuine Parts Company as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, notable return on equity, reasonable valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • GPC's revenue growth has slightly outpaced the industry average of 7.5%. Since the same quarter one year prior, revenues slightly increased by 9.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Compared to where it was 12 months ago, this stock has enjoyed a nice rise of 30.42% which was in line with the performance of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, GPC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • 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 Distributors industry and the overall market, GENUINE PARTS CO's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has slightly increased to $370.41 million or 7.83% when compared to the same quarter last year. Despite an increase in cash flow, GENUINE PARTS CO's average is still marginally south of the industry average growth rate of 7.85%.

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