Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified

SPX

(

SPW

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

  • SPW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $34.9 million.
  • SPW has traded 63,865 shares today.
  • SPW traded in a range 242.4% of the normal price range with a price range of $3.53.
  • SPW traded above its daily resistance level (quality: 12 days, meaning that the stock is crossing a resistance level set by the last 12 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 SPW:

SPX Corporation provides specialized engineered solutions worldwide. The company operates through two segments, Flow Technology, and Thermal Equipment and Services. The stock currently has a dividend yield of 2.4%. SPW has a PE ratio of 28. Currently there are 8 analysts that rate SPX a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for SPX has been 610,000 shares per day over the past 30 days. SPX has a market cap of $2.6 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.39 and a short float of 3.3% with 2.56 days to cover. Shares are down 27.1% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates SPX as a

hold

. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:

  • The debt-to-equity ratio is somewhat low, currently at 0.88, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.84 is somewhat weak and could be cause for future problems.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 15.4%. Since the same quarter one year prior, revenues fell by 12.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • SPX CORP 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. 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, SPX CORP increased its bottom line by earning $8.71 versus $4.59 in the prior year. For the next year, the market is expecting a contraction of 48.3% in earnings ($4.50 versus $8.71).
  • The gross profit margin for SPX CORP is currently lower than what is desirable, coming in at 29.53%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.74% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$108.80 million or 79.53% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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