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Barbarian At The Gate: Six Flags Entertainment (SIX)

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 Six Flags Entertainment (SIX) 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 Six Flags Entertainment as such a stock due to the following factors:

  • SIX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $23.3 million.
  • SIX has traded 230,990 shares today.
  • SIX traded in a range 217.3% of the normal price range with a price range of $1.28.
  • SIX traded above its daily resistance level (quality: 5 days, meaning that the stock is crossing a resistance level set by the last 5 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 SIX with the Ticky from Trade-Ideas. See the FREE profile for SIX NOW at Trade-Ideas

More details on SIX:

Six Flags Entertainment Corporation owns and operates regional theme, water, and zoological parks. The company's parks offer various state-of-the-art and traditional thrill rides, water attractions, themed areas, concerts and shows, restaurants, game venues, and retail outlets. The stock currently has a dividend yield of 5.1%. SIX has a PE ratio of 15.9. Currently there are 3 analysts that rate Six Flags Entertainment a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Six Flags Entertainment has been 602,600 shares per day over the past 30 days. Six Flags Entertainment has a market cap of $3.5 billion and is part of the services sector and leisure industry. The stock has a beta of 1.52 and a short float of 7.5% with 8.20 days to cover. Shares are down 1.4% year-to-date as of the close of trading on Wednesday.

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

Highlights from the ratings report include:

  • SIX's revenue growth has slightly outpaced the industry average of 0.3%. Since the same quarter one year prior, revenues slightly increased by 4.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for SIX FLAGS ENTERTAINMENT CORP is rather high; currently it is at 66.10%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.86% significantly outperformed against the industry average.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to other companies in the Hotels, Restaurants & Leisure industry and the overall market on the basis of return on equity, SIX FLAGS ENTERTAINMENT CORP has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • 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. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • SIX FLAGS ENTERTAINMENT CORP's earnings per share declined by 43.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SIX FLAGS ENTERTAINMENT CORP turned its bottom line around by earning $3.04 versus -$0.25 in the prior year. For the next year, the market is expecting a contraction of 71.4% in earnings ($0.87 versus $3.04).

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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