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Trade-Ideas: Service Corporation International (SCI) 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 Service Corporation International ( SCI) 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 Service Corporation International as such a stock due to the following factors:

  • SCI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $38.9 million.
  • SCI has traded 1.4 million shares today.
  • SCI traded in a range 251.6% of the normal price range with a price range of $0.87.
  • SCI traded above its daily resistance level (quality: 111 days, meaning that the stock is crossing a resistance level set by the last 111 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 SCI:

Service Corporation International provides death care products and services in North America and Germany. The company operates through two segments: Funeral and Cemetery. The stock currently has a dividend yield of 1.6%. SCI has a PE ratio of 25.6. Currently there are 3 analysts that rate Service Corporation International a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Service Corporation International has been 1.4 million shares per day over the past 30 days. Service Corporation International has a market cap of $3.7 billion and is part of the services sector and diversified services industry. The stock has a beta of 0.98 and a short float of 1.3% with 0.85 days to cover. Shares are down 3.5% 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 Service Corporation International as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:

  • SCI's revenue growth has slightly outpaced the industry average of 4.0%. Since the same quarter one year prior, revenues slightly increased by 5.0%. 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.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • SERVICE CORP INTERNATIONAL's earnings per share declined by 36.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SERVICE CORP INTERNATIONAL increased its bottom line by earning $0.70 versus $0.62 in the prior year. This year, the market expects an improvement in earnings ($0.89 versus $0.70).
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Diversified Consumer Services industry average, but is less than that of the S&P 500. The net income has significantly decreased by 34.8% when compared to the same quarter one year ago, falling from $41.06 million to $26.78 million.

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