Trade-Ideas: Nucor (NUE) 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 Nucor as such a stock due to the following factors:
- NUE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $107.9 million.
- NUE has traded 810,097 shares today.
- NUE traded in a range 228.5% of the normal price range with a price range of $1.82.
- NUE traded above its daily resistance level (quality: 21 days, meaning that the stock is crossing a resistance level set by the last 21 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 NUE:
Nucor Corporation manufactures and sells steel and steel products in the United States and internationally. It operates through three segments: Steel Mills, Steel Products, and Raw Materials. The stock currently has a dividend yield of 3.1%. NUE has a PE ratio of 21.3. Currently there are 7 analysts that rate Nucor a buy, no analysts rate it a sell, and 6 rate it a hold.
The average volume for Nucor has been 2.4 million shares per day over the past 30 days. Nucor has a market cap of $15.1 billion and is part of the basic materials sector and metals & mining industry. The stock has a beta of 1.35 and a short float of 3% with 3.83 days to cover. Shares are down 3.3% year-to-date as of the close of trading on Tuesday.
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Analysis:
rates Nucor as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 18.9%. Since the same quarter one year prior, revenues slightly increased by 2.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- NUCOR CORP has improved earnings per share by 22.6% 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, NUCOR CORP increased its bottom line by earning $2.22 versus $1.52 in the prior year. This year, the market expects an improvement in earnings ($2.58 versus $2.22).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Metals & Mining industry average. The net income increased by 23.4% when compared to the same quarter one year prior, going from $170.49 million to $210.43 million.
- Net operating cash flow has significantly increased by 114.77% to $417.34 million when compared to the same quarter last year. In addition, NUCOR CORP has also vastly surpassed the industry average cash flow growth rate of -47.05%.
- Despite currently having a low debt-to-equity ratio of 0.59, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that NUE's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.55 is high and demonstrates strong liquidity.
- You can view the full Nucor Ratings Report.
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