Trade-Ideas LLC identified

Knight Transportation

(

KNX

) 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 Knight Transportation as such a stock due to the following factors:

  • KNX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $23.1 million.
  • KNX has traded 94,799 shares today.
  • KNX traded in a range 221.2% of the normal price range with a price range of $1.48.
  • KNX traded above its daily resistance level (quality: 5 days, meaning that the stock is crossing a resistance level set by the last 5 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 KNX:

Knight Transportation, Inc., together with its subsidiaries, operates as a short-to-medium haul truckload carrier of general commodities primarily in the United States. It operates through two segments, Trucking and Logistics. The stock currently has a dividend yield of 0.8%. KNX has a PE ratio of 21. Currently there are 2 analysts that rate Knight Transportation a buy, 2 analysts rate it a sell, and 12 rate it a hold.

The average volume for Knight Transportation has been 904,800 shares per day over the past 30 days. Knight Transportation has a market cap of $2.3 billion and is part of the services sector and transportation industry. The stock has a beta of 0.83 and a short float of 12.3% with 11.40 days to cover. Shares are up 19% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Knight Transportation as a

buy

. 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 increase in stock price during the past year. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • KNX's debt-to-equity ratio is very low at 0.15 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, KNX has a quick ratio of 2.16, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has increased to $67.59 million or 15.98% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -10.01%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.3%. Since the same quarter one year prior, revenues slightly dropped by 6.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • After a year of stock price fluctuations, the net result is that KNX's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • KNIGHT TRANSPORTATION INC's earnings per share declined by 22.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, KNIGHT TRANSPORTATION INC increased its bottom line by earning $1.42 versus $1.25 in the prior year. For the next year, the market is expecting a contraction of 14.1% in earnings ($1.22 versus $1.42).

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