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.

Trade-Ideas LLC identified

CommScope

(

COMM

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

  • COMM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $27.2 million.
  • COMM has traded 950,569 shares today.
  • COMM traded in a range 303.2% of the normal price range with a price range of $2.52.
  • COMM traded above its daily resistance level (quality: 32 days, meaning that the stock is crossing a resistance level set by the last 32 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 COMM:

CommScope Holding Company, Inc., together with its subsidiaries, provides connectivity and infrastructure solutions for wireless, business enterprise, and residential broadband networks worldwide. The company operates through three segments: Wireless, Enterprise, and Broadband. COMM has a PE ratio of 28. Currently there are 5 analysts that rate CommScope a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for CommScope has been 1.2 million shares per day over the past 30 days. CommScope has a market cap of $5.8 billion and is part of the technology sector and telecommunications industry. Shares are up 31% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates CommScope as a

hold

. The company's strengths can be seen in multiple areas, such as its notable return on equity, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and generally higher debt management risk.

Highlights from the ratings report include:

  • 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 Communications Equipment industry and the overall market, COMMSCOPE HOLDING CO INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 103.49% to $1.24 million when compared to the same quarter last year. In addition, COMMSCOPE HOLDING CO INC has also vastly surpassed the industry average cash flow growth rate of -22.44%.
  • Compared to its closing price of one year ago, COMM's share price has jumped by 32.37%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The debt-to-equity ratio is very high at 2.02 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 2.97, which shows the ability to cover short-term cash needs.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Communications Equipment industry. The net income has significantly decreased by 38.8% when compared to the same quarter one year ago, falling from $64.49 million to $39.48 million.

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