Trade-Ideas LLC identified

Dril-Quip

(

DRQ

) 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 Dril-Quip as such a stock due to the following factors:

  • DRQ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $32.4 million.
  • DRQ has traded 490,011 shares today.
  • DRQ traded in a range 208.8% of the normal price range with a price range of $5.26.
  • DRQ traded above its daily resistance level (quality: 41 days, meaning that the stock is crossing a resistance level set by the last 41 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 DRQ:

TheStreet Recommends

Dril-Quip, Inc., together with its subsidiaries, designs, manufactures, sells, and services engineered offshore drilling and production equipment for use in deepwater, harsh environment, and severe service applications worldwide. DRQ has a PE ratio of 11. Currently there are 2 analysts that rate Dril-Quip a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Dril-Quip has been 458,200 shares per day over the past 30 days. Dril-Quip has a market cap of $2.2 billion and is part of the basic materials sector and energy industry. The stock has a beta of 0.68 and a short float of 5.8% with 3.95 days to cover. Shares are down 20.9% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Dril-Quip as a

hold

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • DRQ 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. Along with this, the company maintains a quick ratio of 5.38, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has increased to $25.94 million or 43.57% when compared to the same quarter last year. In addition, DRIL-QUIP INC has also vastly surpassed the industry average cash flow growth rate of -14.20%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Energy Equipment & Services industry and the overall market on the basis of return on equity, DRIL-QUIP INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The change in net income from the same quarter one year ago has exceeded that of the Energy Equipment & Services industry average, but is less than that of the S&P 500. The net income has decreased by 23.6% when compared to the same quarter one year ago, dropping from $51.32 million to $39.21 million.
  • Looking at the price performance of DRQ's shares over the past 12 months, there is not much good news to report: the stock is down 41.66%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

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