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

Trade-Ideas LLC identified Northrop Grumman (NOC) 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

Northrop Grumman

(

NOC

) 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 Northrop Grumman as such a stock due to the following factors:

  • NOC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $187.3 million.
  • NOC has traded 1.6 million shares today.
  • NOC traded in a range 204% of the normal price range with a price range of $7.03.
  • NOC 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 NOC:

Northrop Grumman Corporation, a security company, provides systems, products, and solutions in aerospace, electronics, information systems, and technical service areas to government and commercial customers worldwide. The stock currently has a dividend yield of 1.8%. NOC has a PE ratio of 17. Currently there are 6 analysts that rate Northrop Grumman a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Northrop Grumman has been 1.2 million shares per day over the past 30 days. Northrop Grumman has a market cap of $32.9 billion and is part of the industrial goods sector and aerospace/defense industry. The stock has a beta of 0.83 and a short float of 1.2% with 2.34 days to cover. Shares are up 21.3% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Northrop Grumman as a

buy

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, reasonable valuation levels and notable return on equity. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 32.56% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, NOC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • NORTHROP GRUMMAN CORP has improved earnings per share by 21.7% 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. During the past fiscal year, NORTHROP GRUMMAN CORP increased its bottom line by earning $9.74 versus $8.34 in the prior year. This year, the market expects an improvement in earnings ($9.85 versus $9.74).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Aerospace & Defense industry average. The net income increased by 9.1% when compared to the same quarter one year prior, going from $473.00 million to $516.00 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to other companies in the Aerospace & Defense industry and the overall market on the basis of return on equity, NORTHROP GRUMMAN CORP has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.

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