Watch Out: Barbarians At The Gate For Herbalife (HLF)
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 Herbalife (HLF) 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 Herbalife as such a stock due to the following factors:
- HLF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $130.8 million.
- HLF has traded 1.4 million shares today.
- HLF traded in a range 234.4% of the normal price range with a price range of $4.26.
- HLF traded above its daily resistance level (quality: 20 days, meaning that the stock is crossing a resistance level set by the last 20 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 HLF with the Ticky from Trade-Ideas. See the FREE profile for HLF NOW at Trade-IdeasMore details on HLF: Herbalife Ltd., a nutrition company, sells weight management, healthy meals and snacks, sports and fitness, energy and targeted nutritional products, and personal care products worldwide. The stock currently has a dividend yield of 1.8%. HLF has a PE ratio of 13.4. Currently there are 4 analysts that rate Herbalife a buy, no analysts rate it a sell, and none rate it a hold.The average volume for Herbalife has been 3.5 million shares per day over the past 30 days. Herbalife has a market cap of $6.7 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 2.00 and a short float of 32.2% with 12.00 days to cover. Shares are down 16.2% year-to-date as of the close of trading on Friday.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 Herbalife as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, increase in net income and good cash flow from operations. 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:
- The revenue growth came in higher than the industry average of 9.6%. Since the same quarter one year prior, revenues rose by 19.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 60.78% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HLF should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- HERBALIFE LTD has improved earnings per share by 15.0% 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, HERBALIFE LTD increased its bottom line by earning $4.91 versus $3.95 in the prior year. This year, the market expects an improvement in earnings ($6.00 versus $4.91).
- The net income growth from the same quarter one year ago has significantly exceeded that of the Personal Products industry average, but is less than that of the S&P 500. The net income increased by 10.1% when compared to the same quarter one year prior, going from $112.21 million to $123.54 million.
- Net operating cash flow has increased to $195.89 million or 16.67% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -24.79%.
- You can view the full Herbalife Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
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