Cadence Design Systems (CDNS) 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.
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 Cadence Design Systems as such a stock due to the following factors:
- CDNS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $46.9 million.
- CDNS has traded 406,174 shares today.
- CDNS traded in a range 239.6% of the normal price range with a price range of $0.80.
- CDNS traded above its daily resistance level (quality: 1 day, meaning that the stock is crossing a resistance level set by the last 1 calendar day. 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 CDNS:
Cadence Design Systems, Inc. CDNS has a PE ratio of 35.8. Currently there are 6 analysts that rate Cadence Design Systems a buy, no analysts rate it a sell, and 1 rates it a hold.
The average volume for Cadence Design Systems has been 3.0 million shares per day over the past 30 days. Cadence Design Systems has a market cap of $5.4 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.09 and a short float of 13.6% with 12.34 days to cover. Shares are down 1.9% year-to-date as of the close of trading on Thursday.
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Analysis:
rates Cadence Design Systems as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, reasonable valuation levels, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- CDNS's revenue growth has slightly outpaced the industry average of 10.3%. Since the same quarter one year prior, revenues rose by 12.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- 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. Although other factors naturally played a role, the company's strong earnings growth was key. 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.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 72.5% when compared to the same quarter one year prior, rising from $37.71 million to $65.03 million.
- Net operating cash flow has increased to $132.07 million or 10.82% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -1.21%.
- You can view the full Cadence Design Systems Ratings Report.
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