Watch Out: Barbarians At The Gate For Shutterstock (SSTK)
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 Shutterstock as such a stock due to the following factors:
- SSTK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $21.8 million.
- SSTK has traded 1.3 million shares today.
- SSTK traded in a range 209.7% of the normal price range with a price range of $2.98.
- SSTK traded above its daily resistance level (quality: 19 days, meaning that the stock is crossing a resistance level set by the last 19 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 SSTK:
Shutterstock, Inc. operates as an online marketplace for commercial digital content imagery. SSTK has a PE ratio of 49. Currently there are 2 analysts that rate Shutterstock a buy, no analysts rate it a sell, and 4 rate it a hold.
The average volume for Shutterstock has been 517,200 shares per day over the past 30 days. Shutterstock has a market cap of $1.0 billion and is part of the services sector and diversified services industry. The stock has a beta of 1.81 and a short float of 31% with 9.08 days to cover. Shares are down 59.5% year-to-date as of the close of trading on Wednesday.
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Analysis:
rates Shutterstock 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 growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and weak operating cash flow.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 13.7%. Since the same quarter one year prior, revenues rose by 30.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- SSTK has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, SSTK has a quick ratio of 1.99, which demonstrates the ability of the company to cover short-term liquidity needs.
- SHUTTERSTOCK INC has improved earnings per share by 7.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SHUTTERSTOCK INC reported lower earnings of $0.62 versus $0.76 in the prior year. This year, the market expects an improvement in earnings ($1.16 versus $0.62).
- Net operating cash flow has decreased to $18.63 million or 11.94% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- SSTK's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 61.20%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, SSTK is still more expensive than most of the other companies in its industry.
- You can view the full Shutterstock Ratings Report.
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