Trade-Ideas LLC identified

Rowan Companies

(

RDC

) 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 Rowan Companies as such a stock due to the following factors:

  • RDC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $50.1 million.
  • RDC has traded 1.9 million shares today.
  • RDC traded in a range 205.8% of the normal price range with a price range of $1.99.
  • RDC traded above its daily resistance level (quality: 28 days, meaning that the stock is crossing a resistance level set by the last 28 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 RDC:

TheStreet Recommends

Rowan Companies plc provides offshore oil and gas contract drilling services. It operates a fleet of 30 self-elevating mobile offshore jack-up drilling units, as well as 3 ultra-deepwater drill ships. The stock currently has a dividend yield of 2.6%. RDC has a PE ratio of 141. Currently there are 6 analysts that rate Rowan Companies a buy, 2 analysts rate it a sell, and 9 rate it a hold.

The average volume for Rowan Companies has been 2.7 million shares per day over the past 30 days. Rowan Companies has a market cap of $1.9 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.11 and a short float of 5.2% with 2.36 days to cover. Shares are down 28.5% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Rowan Companies as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 22.5%. Since the same quarter one year prior, revenues rose by 20.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.58, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, RDC has a quick ratio of 1.81, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Compared to its price level of one year ago, RDC is down 46.40% to its most recent closing price of 16.05. Looking ahead, our view is that this company's fundamentals will not have much impact either way, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • ROWAN COMPANIES PLC reported significant earnings per share improvement 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, ROWAN COMPANIES PLC swung to a loss, reporting -$0.96 versus $2.04 in the prior year. This year, the market expects an improvement in earnings ($2.85 versus -$0.96).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Energy Equipment & Services industry and the overall market, ROWAN COMPANIES PLC's return on equity significantly trails that of both the industry average and the S&P 500.

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