Trade-Ideas: Sohu.com (SOHU) 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 Sohu.com as such a stock due to the following factors:
- SOHU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.2 million.
- SOHU has traded 348,698 shares today.
- SOHU traded in a range 241.4% of the normal price range with a price range of $3.98.
- SOHU traded above its daily resistance level (quality: 8 days, meaning that the stock is crossing a resistance level set by the last 8 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 SOHU:
Sohu.com Inc. provides online media, search, and game services on personal computers (PCs), mobile devices, and tablets in the People's Republic of China. Currently there are 3 analysts that rate Sohu.com a buy, 1 analyst rates it a sell, and 3 rate it a hold.
The average volume for Sohu.com has been 335,000 shares per day over the past 30 days. Sohu.com has a market cap of $2.0 billion and is part of the technology sector and internet industry. The stock has a beta of 1.27 and a short float of 2.1% with 1.21 days to cover. Shares are down 6% year-to-date as of the close of trading on Thursday.
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Analysis:
rates Sohu.com as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- SOHU's revenue growth has slightly outpaced the industry average of 18.6%. Since the same quarter one year prior, revenues rose by 23.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.31, 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 SOHU's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.99 is high and demonstrates strong liquidity.
- The gross profit margin for SOHU.COM INC is rather high; currently it is at 59.01%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, SOHU's net profit margin of -4.10% significantly underperformed when compared to the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 790.7% when compared to the same quarter one year ago, falling from $2.83 million to -$19.58 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Internet Software & Services industry and the overall market, SOHU.COM INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full Sohu.com Ratings Report.
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