Trade-Ideas: JinkoSolar (JKS) 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.
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 JinkoSolar as such a stock due to the following factors:
- JKS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $27.8 million.
- JKS has traded 1.8 million shares today.
- JKS traded in a range 210.8% of the normal price range with a price range of $2.24.
- JKS traded above its daily resistance level (quality: 10 days, meaning that the stock is crossing a resistance level set by the last 10 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 JKS:
JinkoSolar Holding Co., Ltd., together with its subsidiaries, designs, develops, produces, and markets photovoltaic products in the People's Republic of China and internationally. JKS has a PE ratio of 6.7. Currently there are 4 analysts that rate JinkoSolar a buy, no analysts rate it a sell, and 1 rates it a hold.
The average volume for JinkoSolar has been 1.2 million shares per day over the past 30 days. JinkoSolar has a market cap of $701.8 million and is part of the technology sector and electronics industry. Shares are up 12.9% year-to-date as of the close of trading on Monday.
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Analysis:
rates JinkoSolar as a
. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, poor profit margins and generally disappointing historical performance in the stock itself.
Highlights from the ratings report include:
- The debt-to-equity ratio is very high at 2.38 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, JKS has a quick ratio of 0.70, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- The gross profit margin for JINKOSOLAR HOLDING CO is rather low; currently it is at 22.84%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 8.29% significantly trails the industry average.
- Looking at the price performance of JKS's shares over the past 12 months, there is not much good news to report: the stock is down 30.04%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- JINKOSOLAR HOLDING CO's earnings per share declined by 25.0% 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, JINKOSOLAR HOLDING CO increased its bottom line by earning $2.39 versus $1.09 in the prior year. This year, the market expects an improvement in earnings ($2.92 versus $2.39).
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market on the basis of return on equity, JINKOSOLAR HOLDING CO has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- You can view the full JinkoSolar Ratings Report.
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