Watch Out: Barbarians At The Gate For Monsanto (MON)

Trade-Ideas LLC identified Monsanto (MON) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Monsanto

(

MON

) 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 Monsanto as such a stock due to the following factors:

  • MON has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $401.6 million.
  • MON has traded 3.0 million shares today.
  • MON traded in a range 240.5% of the normal price range with a price range of $6.10.
  • MON traded above its daily resistance level (quality: 20 days, meaning that the stock is crossing a resistance level set by the last 20 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 MON:

Monsanto Company, together with its subsidiaries, provides agricultural products for farmers worldwide. It operates in two segments, Seeds and Genomics, and Agricultural Productivity. The stock currently has a dividend yield of 2.1%. MON has a PE ratio of 43. Currently there are 7 analysts that rate Monsanto a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Monsanto has been 4.8 million shares per day over the past 30 days. Monsanto has a market cap of $44.8 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 1.04 and a short float of 1.7% with 1.61 days to cover. Shares are up 2.6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Monsanto as a

buy

. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • Net operating cash flow has increased to -$974.00 million or 37.08% when compared to the same quarter last year. Despite an increase in cash flow, MONSANTO CO's cash flow growth rate is still lower than the industry average growth rate of 78.37%.
  • The gross profit margin for MONSANTO CO is rather high; currently it is at 61.09%. Regardless of MON's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MON's net profit margin of 17.11% compares favorably to the industry average.
  • MON, with its decline in revenue, slightly underperformed the industry average of 5.9%. Since the same quarter one year prior, revenues slightly dropped by 8.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 Chemicals industry and the overall market on the basis of return on equity, MONSANTO CO has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

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