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Trade-Ideas: Southern Copper Corporation (SCCO) Is Today's "Barbarian At The Gate" Stock

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 Southern Copper Corporation ( SCCO) 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 Southern Copper Corporation as such a stock due to the following factors:

  • SCCO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $70.8 million.
  • SCCO has traded 1.1 million shares today.
  • SCCO traded in a range 235.4% of the normal price range with a price range of $1.61.
  • SCCO traded above its daily resistance level (quality: 250 days, meaning that the stock is crossing a resistance level set by the last 250 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 SCCO with the Ticky from Trade-Ideas. See the FREE profile for SCCO NOW at Trade-Ideas

More details on SCCO:

Southern Copper Corporation engages in mining, exploring, producing, smelting, and refining copper and other minerals in Peru, Mexico, and Chile. The stock currently has a dividend yield of 1.9%. SCCO has a PE ratio of 14.4. Currently there are 5 analysts that rate Southern Copper Corporation a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Southern Copper Corporation has been 2.3 million shares per day over the past 30 days. Southern Copper has a market cap of $25.1 billion and is part of the basic materials sector and metals & mining industry. The stock has a beta of 1.20 and a short float of 4.8% with 3.38 days to cover. Shares are up 6.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Southern Copper Corporation as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, notable return on equity, largely solid financial position with reasonable debt levels by most measures 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 58.0% when compared to the same quarter one year prior, rising from $217.87 million to $344.22 million.
  • 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 Metals & Mining industry and the overall market, SOUTHERN COPPER CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • SCCO's debt-to-equity ratio of 0.78 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.72 is very high and demonstrates very strong liquidity.
  • The gross profit margin for SOUTHERN COPPER CORP is rather high; currently it is at 51.89%. Regardless of SCCO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SCCO's net profit margin of 24.86% compares favorably to the industry average.
  • SCCO, with its decline in revenue, underperformed when compared the industry average of 1.9%. Since the same quarter one year prior, revenues fell by 10.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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