Trade-Ideas: Family Dollar Stores (FDO) 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 Family Dollar Stores (FDO) 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 Family Dollar Stores as such a stock due to the following factors:
- FDO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $269.1 million.
- FDO has traded 3.0 million shares today.
- FDO traded in a range 208.2% of the normal price range with a price range of $3.92.
- FDO traded above its daily resistance level (quality: 42 days, meaning that the stock is crossing a resistance level set by the last 42 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 FDO with the Ticky from Trade-Ideas. See the FREE profile for FDO NOW at Trade-IdeasMore details on FDO: Family Dollar Stores, Inc. operates a chain of self-service retail discount stores primarily for low- and middle-income consumers in the United States. The stock currently has a dividend yield of 1.6%. FDO has a PE ratio of 17.1. Currently there are no analysts that rate Family Dollar Stores a buy, 5 analysts rate it a sell, and 14 rate it a hold.The average volume for Family Dollar Stores has been 1.5 million shares per day over the past 30 days. Family Dollar Stores has a market cap of $7.4 billion and is part of the services sector and retail industry. The stock has a beta of 0.39 and a short float of 5.2% with 1.25 days to cover. Shares are down 0.2% year-to-date as of the close of trading on Thursday.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 Family Dollar Stores as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, reasonable valuation levels and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins.Highlights from the ratings report include:
- FDO's revenue growth has slightly outpaced the industry average of 2.5%. Since the same quarter one year prior, revenues slightly increased by 3.2%. 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 current debt-to-equity ratio, 0.48, is low and is below the industry average, implying that there has been successful management of debt levels.
- Net operating cash flow has significantly increased by 194.11% to $26.13 million when compared to the same quarter last year. In addition, FAMILY DOLLAR STORES has also vastly surpassed the industry average cash flow growth rate of -21.63%.
- FAMILY DOLLAR STORES' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FAMILY DOLLAR STORES increased its bottom line by earning $3.83 versus $3.58 in the prior year. This year, the market expects an improvement in earnings ($3.96 versus $3.83).
- You can view the full Family Dollar Stores 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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