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TD Ameritrade (AMTD) Marked As A Barbarian At The Gate

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 TD Ameritrade ( AMTD) 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 TD Ameritrade as such a stock due to the following factors:

  • AMTD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $92.1 million.
  • AMTD has traded 839,245 shares today.
  • AMTD traded in a range 205.3% of the normal price range with a price range of $0.97.
  • AMTD traded above its daily resistance level (quality: 7 days, meaning that the stock is crossing a resistance level set by the last 7 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 AMTD:

TD Ameritrade Holding Corporation provides securities brokerage services and technology-based financial services to retail investors, traders, and independent registered investment advisors (RIAs) in the United States. The stock currently has a dividend yield of 1.6%. AMTD has a PE ratio of 21.7. Currently there are 11 analysts that rate TD Ameritrade a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for TD Ameritrade has been 3.9 million shares per day over the past 30 days. TD Ameritrade has a market cap of $16.6 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.49 and a short float of 5.7% with 3.49 days to cover. Shares are down 1.6% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates TD Ameritrade as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and impressive record of earnings per share growth. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 5.2%. Since the same quarter one year prior, revenues rose by 19.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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 Capital Markets industry and the overall market, TD AMERITRADE HOLDING CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • 45.28% is the gross profit margin for TD AMERITRADE HOLDING CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.80% is above that of the industry average.
  • Net operating cash flow has increased to -$266.00 million or 42.17% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 12.73%.
  • TD AMERITRADE HOLDING CORP has improved earnings per share by 34.6% 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, TD AMERITRADE HOLDING CORP increased its bottom line by earning $1.22 versus $1.06 in the prior year. This year, the market expects an improvement in earnings ($1.42 versus $1.22).

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