Barbarian At The Gate: Mallinckrodt (MNK)

Trade-Ideas LLC identified Mallinckrodt (MNK) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Mallinckrodt

(

MNK

) 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 Mallinckrodt as such a stock due to the following factors:

  • MNK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $75.2 million.
  • MNK has traded 1.4 million shares today.
  • MNK traded in a range 247.4% of the normal price range with a price range of $4.72.
  • MNK traded above its daily resistance level (quality: 77 days, meaning that the stock is crossing a resistance level set by the last 77 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 MNK:

Mallinckrodt public limited company develops, manufactures, markets, and distributes specialty pharmaceutical and biopharmaceutical products, and nuclear imaging agents in the United States, Europe, the Middle East, Africa, and internationally. MNK has a PE ratio of 19. Currently there are 11 analysts that rate Mallinckrodt a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Mallinckrodt has been 1.9 million shares per day over the past 30 days. Mallinckrodt has a market cap of $6.9 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.51 and a short float of 13.1% with 10.75 days to cover. Shares are down 16.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Mallinckrodt as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, attractive valuation levels and good cash flow from operations. We feel its 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:

  • MNK's revenue growth has slightly outpaced the industry average of 8.4%. Since the same quarter one year prior, revenues rose by 12.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MALLINCKRODT PLC reported significant earnings per share improvement 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, MALLINCKRODT PLC turned its bottom line around by earning $2.61 versus -$3.57 in the prior year. This year, the market expects an improvement in earnings ($8.30 versus $2.61).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Pharmaceuticals industry average. The net income increased by 19.6% when compared to the same quarter one year prior, going from $98.90 million to $118.30 million.
  • Net operating cash flow has significantly increased by 53.79% to $228.70 million when compared to the same quarter last year. In addition, MALLINCKRODT PLC has also vastly surpassed the industry average cash flow growth rate of -8.81%.

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