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Campbell Soup (CPB) Marked As A Barbarian At The Gate

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 Campbell Soup (CPB) 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 Campbell Soup as such a stock due to the following factors:

  • CPB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $135.4 million.
  • CPB has traded 5.7 million shares today.
  • CPB traded in a range 272.3% of the normal price range with a price range of $2.43.
  • CPB traded above its daily resistance level (quality: 20 days, meaning that the stock is crossing a resistance level set by the last 20 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 CPB with the Ticky from Trade-Ideas. See the FREE profile for CPB NOW at Trade-Ideas

More details on CPB:

Campbell Soup Company, together with its subsidiaries, manufactures and markets branded convenience food products. It operates through U.S. Simple Meals; Global Baking and Snacking; International Simple Meals and Beverages; U.S. Beverages; and Bolthouse and Foodservice segments. The stock currently has a dividend yield of 3.1%. CPB has a PE ratio of 20.1. Currently there is 1 analyst that rates Campbell Soup a buy, 3 analysts rate it a sell, and 11 rate it a hold.

The average volume for Campbell Soup has been 1.9 million shares per day over the past 30 days. Campbell has a market cap of $12.6 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.44 and a short float of 6.8% with 3.70 days to cover. Shares are up 14.9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Campbell Soup as a buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • 35.98% is the gross profit margin for CAMPBELL SOUP CO which we consider to be strong. Regardless of CPB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.94% trails the industry average.
  • CAMPBELL SOUP CO's earnings per share declined by 26.9% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, CAMPBELL SOUP CO reported lower earnings of $2.18 versus $2.41 in the prior year. This year, the market expects an improvement in earnings ($2.51 versus $2.18).
  • CPB, with its decline in revenue, slightly underperformed the industry average of 0.2%. Since the same quarter one year prior, revenues slightly dropped by 7.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Food Products industry and the overall market, CAMPBELL SOUP CO's return on equity significantly exceeds that of both the industry average and 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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