Trade-Ideas: Yahoo (YHOO) 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 or Stephanie Link.
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 Yahoo as such a stock due to the following factors:
- YHOO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $563.9 million.
- YHOO has traded 8.5 million shares today.
- YHOO traded in a range 232.7% of the normal price range with a price range of $1.99.
- YHOO traded above its daily resistance level (quality: 1 day, meaning that the stock is crossing a resistance level set by the last 1 calendar day. 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 YHOO:
Yahoo! Inc. operates as a technology company worldwide. YHOO has a PE ratio of 5.9. Currently there are 17 analysts that rate Yahoo a buy, no analysts rate it a sell, and 8 rate it a hold.
The average volume for Yahoo has been 17.9 million shares per day over the past 30 days. Yahoo has a market cap of $41.3 billion and is part of the technology sector and internet industry. The stock has a beta of 1.26 and a short float of 3.6% with 2.29 days to cover. Shares are down 15.6% year-to-date as of the close of trading on Tuesday.
Analysis:
rates Yahoo as a
. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- YHOO's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, YHOO has a quick ratio of 1.99, which demonstrates the ability of the company to cover short-term liquidity needs.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Internet Software & Services industry and the overall market, YAHOO INC's return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for YAHOO INC is currently very high, coming in at 84.00%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, YHOO's net profit margin of 13.27% significantly trails the industry average.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full Yahoo Ratings Report.
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