Barbarian At The Gate: Rite Aid (RAD)
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.
Trade-Ideas LLC identified
(
) 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 Rite Aid as such a stock due to the following factors:
- RAD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $162.1 million.
- RAD has traded 21.9 million shares today.
- RAD traded in a range 220.7% of the normal price range with a price range of $0.49.
- RAD traded above its daily resistance level (quality: 15 days, meaning that the stock is crossing a resistance level set by the last 15 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 RAD:
Rite Aid Corporation, through its subsidiaries, operates a chain of retail drugstores in the United States. RAD has a PE ratio of 22.6. Currently there are 5 analysts that rate Rite Aid a buy, no analysts rate it a sell, and 1 rates it a hold.
The average volume for Rite Aid has been 21.4 million shares per day over the past 30 days. Rite Aid has a market cap of $7.3 billion and is part of the services sector and retail industry. The stock has a beta of 1.78 and a short float of 3.7% with 1.81 days to cover. Shares are up 4.8% year-to-date as of the close of trading on Tuesday.
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Analysis:
rates Rite Aid as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins.
Highlights from the ratings report include:
- RAD's revenue growth has slightly outpaced the industry average of 0.2%. Since the same quarter one year prior, revenues slightly increased by 5.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The gross profit margin for RITE AID CORP is currently lower than what is desirable, coming in at 30.30%. Regardless of RAD's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.56% trails the industry average.
- Net operating cash flow has significantly decreased to $111.73 million or 54.21% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full Rite Aid Ratings Report.
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