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Watch Out: Barbarians At The Gate For FEI Company (FEIC)

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 FEI Company ( FEIC) 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 FEI Company as such a stock due to the following factors:

  • FEIC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $36.5 million.
  • FEIC has traded 53,864 shares today.
  • FEIC traded in a range 389.4% of the normal price range with a price range of $9.00.
  • FEIC traded above its daily resistance level (quality: 9 days, meaning that the stock is crossing a resistance level set by the last 9 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 FEIC with the Ticky from Trade-Ideas. See the FREE profile for FEIC NOW at Trade-Ideas

More details on FEIC:

FEI Company supplies scientific instruments for nanoscale applications and solutions for industry and science. The stock currently has a dividend yield of 0.5%. FEIC has a PE ratio of 33.0. Currently there are 6 analysts that rate FEI Company a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for FEI Company has been 220,900 shares per day over the past 30 days. FEI has a market cap of $3.8 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.44 and a short float of 1.1% with 1.06 days to cover. Shares are up 1.6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates FEI Company as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • FEIC's revenue growth has slightly outpaced the industry average of 4.9%. Since the same quarter one year prior, revenues rose by 14.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • FEI CO has improved earnings per share by 34.7% 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, FEI CO increased its bottom line by earning $3.01 versus $2.80 in the prior year. This year, the market expects an improvement in earnings ($3.59 versus $3.01).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Electronic Equipment, Instruments & Components industry average. The net income increased by 38.5% when compared to the same quarter one year prior, rising from $29.80 million to $41.27 million.
  • Powered by its strong earnings growth of 34.72% and other important driving factors, this stock has surged by 58.36% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • 46.96% is the gross profit margin for FEI CO which we consider to be strong. Regardless of FEIC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FEIC's net profit margin of 15.55% compares favorably to the industry average.

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