Trade-Ideas: USG (USG) 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 USG as such a stock due to the following factors:
- USG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $40.1 million.
- USG has traded 3.3 million shares today.
- USG traded in a range 531.9% of the normal price range with a price range of $3.18.
- USG traded above its daily resistance level (quality: 5 days, meaning that the stock is crossing a resistance level set by the last 5 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 USG:
USG Corporation, through its subsidiaries, operates as a manufacturer and distributor of building materials worldwide. USG has a PE ratio of 103.0. Currently there are 5 analysts that rate USG a buy, no analysts rate it a sell, and 10 rate it a hold.
The average volume for USG has been 1.7 million shares per day over the past 30 days. USG has a market cap of $3.9 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.28 and a short float of 10.8% with 5.60 days to cover. Shares are down 4.8% year-to-date as of the close of trading on Tuesday.
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Analysis:
rates USG as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and poor profit margins.
Highlights from the ratings report include:
- USG's revenue growth has slightly outpaced the industry average of 2.6%. Since the same quarter one year prior, revenues slightly increased by 4.3%. 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.
- Net operating cash flow has increased to $93.00 million or 38.80% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 20.23%.
- The gross profit margin for USG CORP is rather low; currently it is at 20.86%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -5.55% trails that of the industry average.
- The share price of USG CORP has not done very well: it is down 18.90% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- You can view the full USG Ratings Report.
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