Barbarian At The Gate: Synopsys (SNPS)
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 Synopsys as such a stock due to the following factors:
- SNPS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $26.5 million.
- SNPS has traded 142,583 shares today.
- SNPS traded in a range 224% of the normal price range with a price range of $1.70.
- SNPS traded above its daily resistance level (quality: 526 days, meaning that the stock is crossing a resistance level set by the last 526 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 SNPS:
Synopsys, Inc. provides electronic design automation (EDA) software products used to design and test integrated circuits and electronic systems in the United States, Europe, Japan, and the rest of Asia Pacific. SNPS has a PE ratio of 34. Currently there are 6 analysts that rate Synopsys a buy, no analysts rate it a sell, and 1 rates it a hold.
The average volume for Synopsys has been 799,800 shares per day over the past 30 days. Synopsys has a market cap of $8.1 billion and is part of the technology sector and electronics industry. The stock has a beta of 0.90 and a short float of 1.3% with 3.45 days to cover. Shares are up 19.9% year-to-date as of the close of trading on Wednesday.
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Analysis:
rates Synopsys as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and expanding profit margins. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 17.3%. Since the same quarter one year prior, revenues slightly increased by 6.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- SNPS's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.98 is somewhat weak and could be cause for future problems.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite 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.
- SYNOPSYS INC's earnings per share declined by 16.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SYNOPSYS INC increased its bottom line by earning $1.64 versus $1.58 in the prior year. This year, the market expects an improvement in earnings ($2.77 versus $1.64).
- You can view the full Synopsys Ratings Report.
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