Lincoln Electric Holdings (LECO) Marked As A Barbarian At The Gate

Trade-Ideas LLC identified Lincoln Electric Holdings (LECO) 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

Lincoln Electric Holdings

(

LECO

) 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 Lincoln Electric Holdings as such a stock due to the following factors:

  • LECO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $29.6 million.
  • LECO has traded 545,251 shares today.
  • LECO traded in a range 209.6% of the normal price range with a price range of $2.05.
  • LECO traded above its daily resistance level (quality: 83 days, meaning that the stock is crossing a resistance level set by the last 83 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 LECO:

Lincoln Electric Holdings, Inc., through its subsidiaries, designs, manufactures, and sells welding, cutting, and brazing products in the United States, China, and Internationally. The stock currently has a dividend yield of 2.1%. LECO has a PE ratio of 39. Currently there are 5 analysts that rate Lincoln Electric Holdings a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Lincoln Electric Holdings has been 483,200 shares per day over the past 30 days. Lincoln Electric has a market cap of $4.2 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.05 and a short float of 5.5% with 7.54 days to cover. Shares are up 18.6% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Lincoln Electric Holdings as a

hold

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, disappointing return on equity and feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • The current debt-to-equity ratio, 0.42, 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 1.26, which illustrates the ability to avoid short-term cash problems.
  • 37.17% is the gross profit margin for LINCOLN ELECTRIC HLDGS INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 9.73% is above that of the industry average.
  • LECO, with its decline in revenue, slightly underperformed the industry average of 12.3%. Since the same quarter one year prior, revenues fell by 16.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Machinery industry and the overall market on the basis of return on equity, LINCOLN ELECTRIC HLDGS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Net operating cash flow has significantly decreased to $24.36 million or 53.84% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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