Trade-Ideas LLC identified

Scotts Miracle Gro

(

SMG

) 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 Scotts Miracle Gro as such a stock due to the following factors:

  • SMG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $27.2 million.
  • SMG has traded 182,882 shares today.
  • SMG traded in a range 206.1% of the normal price range with a price range of $2.97.
  • SMG traded above its daily resistance level (quality: 49 days, meaning that the stock is crossing a resistance level set by the last 49 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in SMG with the Ticky from Trade-Ideas. See the FREE profile for SMG NOW at Trade-Ideas

More details on SMG:

The Scotts Miracle-Gro Company manufactures, markets, and sells consumer lawn and garden products worldwide. The stock currently has a dividend yield of 2.9%. Currently there are 3 analysts that rate Scotts Miracle Gro a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Scotts Miracle Gro has been 307,500 shares per day over the past 30 days. Scotts Miracle Gro has a market cap of $4.0 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 0.55 and a short float of 0.5% with 0.90 days to cover. Shares are up 0.7% year-to-date as of the close of trading on Thursday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Scotts Miracle Gro as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 18.2%. Since the same quarter one year prior, revenues slightly increased by 5.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has slightly increased to $222.70 million or 7.79% when compared to the same quarter last year. In addition, SCOTTS MIRACLE-GRO CO has also modestly surpassed the industry average cash flow growth rate of 3.90%.
  • 35.25% is the gross profit margin for SCOTTS MIRACLE-GRO CO which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -4.90% is in-line with the industry average.
  • SCOTTS MIRACLE-GRO CO has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, SCOTTS MIRACLE-GRO CO reported lower earnings of $2.54 versus $2.63 in the prior year. This year, the market expects an improvement in earnings ($3.87 versus $2.54).
  • Compared to where it was trading a year ago, SMG's share price has not changed very much due to (a) the relatively weak year-over-year performance of the overall market, (b) the company's stagnant earnings, and (c) other mixed results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.