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Celanese Corporation (CE) 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 Celanese Corporation (CE) 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 Celanese Corporation as such a stock due to the following factors:

  • CE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $59.6 million.
  • CE has traded 91,170 shares today.
  • CE traded in a range 233% of the normal price range with a price range of $2.63.
  • CE traded above its daily resistance level (quality: 2 days, meaning that the stock is crossing a resistance level set by the last 2 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 CE:

Celanese Corporation engages in manufacture and sale of value-added chemicals, thermoplastic polymers, and other chemical-based products. The company operates in four segments: Advanced Engineered Materials, Consumer Specialties, Industrial Specialties, and Acetyl Intermediates. The stock currently has a dividend yield of 1.3%. CE has a PE ratio of 17.1. Currently there are 6 analysts that rate Celanese Corporation a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Celanese Corporation has been 832,400 shares per day over the past 30 days. Celanese has a market cap of $8.6 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 1.96 and a short float of 1.3% with 1.54 days to cover. Shares are down 0.5% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Celanese Corporation as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, revenue growth, 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 generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:

  • CELANESE CORP has improved earnings per share by 33.8% 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 two years. We feel that this trend should continue. During the past fiscal year, CELANESE CORP increased its bottom line by earning $3.99 versus $3.82 in the prior year. This year, the market expects an improvement in earnings ($4.47 versus $3.99).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Chemicals industry average. The net income increased by 35.4% when compared to the same quarter one year prior, rising from $127.00 million to $172.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 5.9%. Since the same quarter one year prior, revenues slightly increased by 1.7%. Growth in the company's revenue appears to have helped boost the 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. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Chemicals industry and the overall market, CELANESE CORP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.

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