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Barbarian At The Gate: Vulcan Materials Company (VMC)

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 Vulcan Materials Company ( VMC) 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 Vulcan Materials Company as such a stock due to the following factors:

  • VMC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $83.1 million.
  • VMC has traded 810,957 shares today.
  • VMC traded in a range 254.4% of the normal price range with a price range of $3.26.
  • VMC traded above its daily resistance level (quality: 535 days, meaning that the stock is crossing a resistance level set by the last 535 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 VMC:

Vulcan Materials Company engages in the production and sale of construction aggregates, as well as asphalt mix, ready-mixed concrete, and cement primarily in the United States. The company operates in four segments: Aggregates, Concrete, Asphalt Mix, and Cement. The stock currently has a dividend yield of 0.1%. VMC has a PE ratio of 541.5. Currently there are 2 analysts that rate Vulcan Materials Company a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Vulcan Materials Company has been 788,100 shares per day over the past 30 days. Vulcan has a market cap of $7.7 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.62 and a short float of 4% with 3.89 days to cover. Shares are down 2.3% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Vulcan Materials Company as a hold. 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 and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 11.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.65, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, VMC has a quick ratio of 1.93, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 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 Construction Materials industry and the overall market, VULCAN MATERIALS CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for VULCAN MATERIALS CO is currently lower than what is desirable, coming in at 29.17%. Regardless of VMC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, VMC's net profit margin of 5.08% compares favorably to the industry average.

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