Trade-Ideas: CDW (CDW) Is Today's "Barbarian At The Gate" Stock

Trade-Ideas LLC identified CDW (CDW) 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

CDW

(

CDW

) 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 CDW as such a stock due to the following factors:

  • CDW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $41.7 million.
  • CDW has traded 149,752 shares today.
  • CDW traded in a range 215% of the normal price range with a price range of $1.84.
  • CDW traded above its daily resistance level (quality: 11 days, meaning that the stock is crossing a resistance level set by the last 11 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 CDW:

CDW Corporation distributes information technology (IT) solutions in the United States and Canada. It operates in two segments, Corporate and Public. The stock currently has a dividend yield of 0.6%. CDW has a PE ratio of 29. Currently there are 7 analysts that rate CDW a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for CDW has been 1.1 million shares per day over the past 30 days. CDW has a market cap of $7.6 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.40 and a short float of 2.4% with 3.06 days to cover. Shares are up 26.4% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates CDW as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:

  • CDW's revenue growth has slightly outpaced the industry average of 2.0%. Since the same quarter one year prior, revenues slightly increased by 6.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 26.00% and other important driving factors, this stock has surged by 49.13% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although CDW had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • Net operating cash flow has decreased to -$78.70 million or 11.78% when compared to the same quarter last year. Despite a decrease in cash flow of 11.78%, CDW CORP is in line with the industry average cash flow growth rate of -12.12%.
  • The debt-to-equity ratio is very high at 3.18 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, CDW's quick ratio is somewhat strong at 1.38, demonstrating the ability to handle short-term liquidity needs.

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