Trade-Ideas LLC identified

Twitter

(

TWTR

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

  • TWTR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $274.8 million.
  • TWTR has traded 22.2 million shares today.
  • TWTR traded in a range 204.2% of the normal price range with a price range of $0.87.
  • TWTR traded above its daily resistance level (quality: 29 days, meaning that the stock is crossing a resistance level set by the last 29 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 TWTR:

Twitter, Inc. operates as a global platform for public self-expression and conversation in real time. Currently there are 11 analysts that rate Twitter a buy, 3 analysts rate it a sell, and 13 rate it a hold.

The average volume for Twitter has been 21.9 million shares per day over the past 30 days. Twitter has a market cap of $10.1 billion and is part of the technology sector and internet industry. Shares are down 38.2% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Twitter as a

sell

. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • TWTR's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 62.27%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • 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 Internet Software & Services industry and the overall market, TWITTER INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for TWITTER INC is currently very high, coming in at 80.73%. Regardless of TWTR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TWTR's net profit margin of -13.41% significantly underperformed when compared to the industry average.
  • Despite currently having a low debt-to-equity ratio of 0.36, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 9.82 is very high and demonstrates very strong liquidity.
  • Net operating cash flow has significantly increased by 76.57% to $162.76 million when compared to the same quarter last year. In addition, TWITTER INC has also vastly surpassed the industry average cash flow growth rate of 19.50%.

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