Trade-Ideas: Praxair (PX) Is Today's "Barbarian At The Gate" Stock
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 Praxair as such a stock due to the following factors:
- PX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $165.1 million.
- PX has traded 1.5 million shares today.
- PX traded in a range 206.3% of the normal price range with a price range of $4.24.
- PX traded above its daily resistance level (quality: 13 days, meaning that the stock is crossing a resistance level set by the last 13 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 PX:
Praxair, Inc. produces, sells, and distributes atmospheric, process, and specialty gases, as well as surface coatings in North America, Europe, South America, and Asia. The stock currently has a dividend yield of 2.6%. PX has a PE ratio of 23. Currently there are 7 analysts that rate Praxair a buy, no analysts rate it a sell, and 7 rate it a hold.
The average volume for Praxair has been 1.9 million shares per day over the past 30 days. Praxair has a market cap of $31.6 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 0.95 and a short float of 3% with 5.92 days to cover. Shares are down 15% year-to-date as of the close of trading on Thursday.
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Analysis:
rates Praxair as a
. The company's strengths can be seen in multiple areas, such as its expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- 44.60% is the gross profit margin for PRAXAIR INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.92% is above that of the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to other companies in the Chemicals industry and the overall market on the basis of return on equity, PRAXAIR INC has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 19.4%. Since the same quarter one year prior, revenues fell by 14.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Net operating cash flow has declined marginally to $676.00 million or 5.18% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The debt-to-equity ratio is very high at 2.23 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, PX maintains a poor quick ratio of 0.86, which illustrates the inability to avoid short-term cash problems.
- You can view the full Praxair Ratings Report.
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