Trade-Ideas: Canadian Solar (CSIQ) Is Today's "Barbarian At The Gate" Stock
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 or Stephanie Link.
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 Canadian Solar as such a stock due to the following factors:
- CSIQ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $75.5 million.
- CSIQ has traded 8.1 million shares today.
- CSIQ traded in a range 227.8% of the normal price range with a price range of $2.63.
- CSIQ traded above its daily resistance level (quality: 149 days, meaning that the stock is crossing a resistance level set by the last 149 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 CSIQ:
Canadian Solar Inc., together with its subsidiaries, designs, develops, manufactures, and sells solar wafers, cells, and solar module products worldwide. The company operates in two segments, Module and Project. CSIQ has a PE ratio of 9.4. Currently there are 5 analysts that rate Canadian Solar a buy, no analysts rate it a sell, and none rate it a hold.
The average volume for Canadian Solar has been 2.9 million shares per day over the past 30 days. Canadian Solar has a market cap of $1.7 billion and is part of the technology sector and electronics industry. The stock has a beta of 3.54 and a short float of 10.2% with 1.90 days to cover. Shares are up 24.8% year-to-date as of the close of trading on Wednesday.
Analysis:
rates Canadian Solar as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, poor profit margins and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- CSIQ's very impressive revenue growth greatly exceeded the industry average of 10.7%. Since the same quarter one year prior, revenues leaped by 86.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CANADIAN SOLAR INC 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. This trend suggests that the performance of the business is improving. During the past fiscal year, CANADIAN SOLAR INC turned its bottom line around by earning $0.56 versus -$4.52 in the prior year. This year, the market expects an improvement in earnings ($4.16 versus $0.56).
- The gross profit margin for CANADIAN SOLAR INC is rather low; currently it is at 22.89%. Regardless of CSIQ's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CSIQ's net profit margin of 11.39% is significantly lower than the industry average.
- Currently the debt-to-equity ratio of 1.56 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, CSIQ has a quick ratio of 0.67, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- You can view the full Canadian Solar Ratings Report.
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