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Storm The Castle: Qlik Technologies (QLIK)

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 Qlik Technologies (QLIK) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Qlik Technologies as such a stock due to the following factors:

  • QLIK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $51.8 million.
  • QLIK has traded 2.2 million shares today.
  • QLIK is trading at 14.84 times the normal volume for the stock at this time of day.
  • QLIK crossed above its 200-day simple moving average.

'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize on. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on QLIK:

Qlik Technologies Inc. engages in the development, commercialization, and implementation of software products and related services for user-driven business intelligence that enables customers to make business decisions primarily in the Americas, Europe, the Asia-Pacific region, and Africa. Currently there are 8 analysts that rate Qlik Technologies a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Qlik Technologies has been 1.6 million shares per day over the past 30 days. Qlik has a market cap of $2.4 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 2.10 and a short float of 11.3% with 4.75 days to cover. Shares are up 3% year-to-date as of the close of trading on Thursday.

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 Qlik Technologies as a hold. 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 and solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 10.6%. Since the same quarter one year prior, revenues rose by 20.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • QLIK 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. To add to this, QLIK has a quick ratio of 2.45, which demonstrates the ability of the company to cover short-term liquidity needs.
  • QLIK TECHNOLOGIES INC has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. 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, QLIK TECHNOLOGIES INC reported lower earnings of $0.04 versus $0.10 in the prior year. This year, the market expects an improvement in earnings ($0.25 versus $0.04).
  • The gross profit margin for QLIK TECHNOLOGIES INC is currently very high, coming in at 87.79%. Regardless of QLIK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, QLIK's net profit margin of 2.87% is significantly lower than the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Software industry and the overall market, QLIK TECHNOLOGIES INC's return on equity significantly trails that of both the industry average and the S&P 500.

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