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Barbarian At The Gate: Thoratec Corporation (THOR)

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 Thoratec Corporation ( THOR) 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 Thoratec Corporation as such a stock due to the following factors:

  • THOR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $24.4 million.
  • THOR has traded 162,122 shares today.
  • THOR traded in a range 213.3% of the normal price range with a price range of $2.04.
  • THOR traded above its daily resistance level (quality: 8 days, meaning that the stock is crossing a resistance level set by the last 8 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 THOR with the Ticky from Trade-Ideas. See the FREE profile for THOR NOW at Trade-Ideas

More details on THOR:

Thoratec Corporation engages in the development, manufacture, and marketing of proprietary medical devices used for circulatory support. THOR has a PE ratio of 42.8. Currently there are 10 analysts that rate Thoratec Corporation a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Thoratec Corporation has been 575,200 shares per day over the past 30 days. Thoratec has a market cap of $1.9 billion and is part of the health care sector and health services industry. The stock has a beta of 0.82 and a short float of 4.3% with 3.51 days to cover. Shares are down 6.1% year-to-date as of the close of trading on Tuesday.

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 Thoratec Corporation 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 and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 24.3%. Since the same quarter one year prior, revenues slightly increased by 7.4%. 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.
  • THOR has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.97, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has increased to $50.35 million or 45.37% when compared to the same quarter last year. In addition, THORATEC CORP has also vastly surpassed the industry average cash flow growth rate of -36.34%.
  • The gross profit margin for THORATEC CORP is currently very high, coming in at 71.30%. Regardless of THOR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, THOR's net profit margin of 14.95% compares favorably to the industry average.
  • THORATEC CORP's earnings per share declined by 21.9% 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 year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, THORATEC CORP reported lower earnings of $0.94 versus $1.19 in the prior year. This year, the market expects an improvement in earnings ($1.83 versus $0.94).

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