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Trade-Ideas LLC identified

Hexcel

(

HXL

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

  • HXL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.3 million.
  • HXL has traded 199,967 shares today.
  • HXL traded in a range 458.1% of the normal price range with a price range of $3.40.
  • HXL traded above its daily resistance level (quality: 3 days, meaning that the stock is crossing a resistance level set by the last 3 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 HXL:

TheStreet Recommends

Hexcel Corporation, together with its subsidiaries, develops, manufactures, and markets structural materials for use in commercial aerospace, space and defense, and industrial markets. The company operates through two segments, Composite Materials and Engineered Products. The stock currently has a dividend yield of 1%. HXL has a PE ratio of 19. Currently there are 6 analysts that rate Hexcel a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Hexcel has been 521,400 shares per day over the past 30 days. Hexcel has a market cap of $4.1 billion and is part of the industrial goods sector and aerospace/defense industry. The stock has a beta of 1.13 and a short float of 6.1% with 12.04 days to cover. Shares are down 6.7% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Hexcel as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • HXL's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 5.5%. 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.
  • The current debt-to-equity ratio, 0.57, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.27, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has significantly increased by 170.54% to $10.30 million when compared to the same quarter last year. In addition, HEXCEL CORP has also vastly surpassed the industry average cash flow growth rate of -0.75%.
  • HEXCEL CORP's earnings per share declined by 15.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HEXCEL CORP increased its bottom line by earning $2.44 versus $2.12 in the prior year. This year, the market expects an improvement in earnings ($2.50 versus $2.44).
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, HXL has underperformed the S&P 500 Index, declining 14.61% from its price level of one year ago. 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 is one of the factors that makes this stock an attractive investment.

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