Watch Out: Barbarians At The Gate For MRC Global (MRC)
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 MRC Global as such a stock due to the following factors:
- MRC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $27.0 million.
- MRC has traded 2.3 million shares today.
- MRC traded in a range 214.5% of the normal price range with a price range of $1.22.
- MRC traded above its daily resistance level (quality: 108 days, meaning that the stock is crossing a resistance level set by the last 108 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 MRC:
MRC Global Inc., through its subsidiaries, distributes pipes, valves, fittings, and related products and services to the energy and industrial sectors in the Unites States, Canada, and internationally. MRC has a PE ratio of 1. Currently there are 5 analysts that rate MRC Global a buy, no analysts rate it a sell, and 3 rate it a hold.
The average volume for MRC Global has been 2.3 million shares per day over the past 30 days. MRC Global has a market cap of $1.3 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.38 and a short float of 10.4% with 4.85 days to cover. Shares are down 16.4% year-to-date as of the close of trading on Thursday.
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Analysis:
rates MRC Global 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, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, unimpressive growth in net income and disappointing return on equity.
Highlights from the ratings report include:
- The current debt-to-equity ratio, 0.48, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.27, which illustrates the ability to avoid short-term cash problems.
- MRC, with its decline in revenue, underperformed when compared the industry average of 0.5%. Since the same quarter one year prior, revenues fell by 20.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Trading Companies & Distributors industry and the overall market, MRC GLOBAL INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for MRC GLOBAL INC is rather low; currently it is at 18.87%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.35% trails that of the industry average.
- You can view the full MRC Global Ratings Report.
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