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Barbarian At The Gate: Maximus (MMS)

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 Maximus (MMS) 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 Maximus as such a stock due to the following factors:

  • MMS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $23.1 million.
  • MMS has traded 55,171 shares today.
  • MMS traded in a range 392.1% of the normal price range with a price range of $3.80.
  • MMS traded above its daily resistance level (quality: 99 days, meaning that the stock is crossing a resistance level set by the last 99 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 MMS:

MAXIMUS, Inc. provides business process services to government health and human services agencies in the United States, Australia, Canada, the United Kingdom, and Saudi Arabia. The company operates in two segments, Health Services and Human Services. The stock currently has a dividend yield of 0.4%. MMS has a PE ratio of 24.3. Currently there are 5 analysts that rate Maximus a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Maximus has been 399,500 shares per day over the past 30 days. Maximus has a market cap of $2.8 billion and is part of the services sector and diversified services industry. The stock has a beta of 0.91 and a short float of 1.9% with 2.73 days to cover. Shares are down 6% 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 Maximus as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 18.4%. Since the same quarter one year prior, revenues rose by 27.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MMS's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, MMS has a quick ratio of 1.64, which demonstrates the ability of the company to cover short-term liquidity needs.
  • MAXIMUS INC reported significant earnings per share improvement 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, MAXIMUS INC increased its bottom line by earning $1.68 versus $1.10 in the prior year. This year, the market expects an improvement in earnings ($1.85 versus $1.68).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the IT Services industry. The net income increased by 50.5% when compared to the same quarter one year prior, rising from $23.67 million to $35.63 million.
  • Powered by its strong earnings growth of 50.00% and other important driving factors, this stock has surged by 25.42% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

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