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Joy Global (JOY) 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 Joy Global ( JOY) 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 Joy Global as such a stock due to the following factors:

  • JOY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $59.6 million.
  • JOY has traded 329,872 shares today.
  • JOY traded in a range 208.9% of the normal price range with a price range of $1.88.
  • JOY traded above its daily resistance level (quality: 22 days, meaning that the stock is crossing a resistance level set by the last 22 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 JOY:

Joy Global Inc. manufactures and services mining equipment for the extraction of coal, copper, iron ore, oil sands, gold, and other minerals. It operates in two segments, Underground Mining Machinery and Surface Mining Equipment. The stock currently has a dividend yield of 1.3%. JOY has a PE ratio of 19.2. Currently there are 7 analysts that rate Joy Global a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Joy Global has been 1.2 million shares per day over the past 30 days. Joy Global has a market cap of $6.1 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 2.17 and a short float of 21.7% with 22.83 days to cover. Shares are up 2.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Joy Global as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:

  • The current debt-to-equity ratio, 0.46, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.07, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has significantly increased by 34534.22% to $141.65 million when compared to the same quarter last year. In addition, JOY GLOBAL INC has also vastly surpassed the industry average cash flow growth rate of -2.78%.
  • 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. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • JOY, with its decline in revenue, underperformed when compared the industry average of 6.2%. Since the same quarter one year prior, revenues fell by 31.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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