Westlake Chemical (WLK) Marked As A Barbarian At The Gate

Trade-Ideas LLC identified Westlake Chemical (WLK) 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

Westlake Chemical

(

WLK

) 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 Westlake Chemical as such a stock due to the following factors:

  • WLK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $43.7 million.
  • WLK has traded 695,508 shares today.
  • WLK traded in a range 240.5% of the normal price range with a price range of $4.39.
  • WLK traded above its daily resistance level (quality: 83 days, meaning that the stock is crossing a resistance level set by the last 83 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 WLK:

Westlake Chemical Corporation manufactures and markets basic chemicals, vinyls, polymers, and fabricated building products. It operates through two segments, Olefins and Vinyls. The stock currently has a dividend yield of 1.2%. WLK has a PE ratio of 11. Currently there are 4 analysts that rate Westlake Chemical a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Westlake Chemical has been 928,900 shares per day over the past 30 days. Westlake Chemical has a market cap of $8.0 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 1.45 and a short float of 3.9% with 2.28 days to cover. Shares are down 1.3% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Westlake Chemical as a

buy

. 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, attractive valuation levels, good cash flow from operations and increase in net income. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 19.1%. Since the same quarter one year prior, revenues rose by 18.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • WLK's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.04, which clearly demonstrates the ability to cover short-term cash needs.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 21.0% when compared to the same quarter one year prior, going from $169.44 million to $205.10 million.
  • Net operating cash flow has increased to $244.80 million or 11.40% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 1.16%.

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