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 or Stephanie Link.

Trade-Ideas LLC identified

Tim Hortons

(

THI

) 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 Tim Hortons as such a stock due to the following factors:

  • THI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $66.6 million.
  • THI has traded 122,889 shares today.
  • THI traded in a range 216.8% of the normal price range with a price range of $1.72.
  • THI traded above its daily resistance level (quality: 527 days, meaning that the stock is crossing a resistance level set by the last 527 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 THI:

Tim Hortons Inc. develops and franchises quick service restaurants primarily in Canada and the United States. The stock currently has a dividend yield of 1.3%. THI has a PE ratio of 31.2. Currently there are no analysts that rate Tim Hortons a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Tim Hortons has been 1.0 million shares per day over the past 30 days. Tim Hortons has a market cap of $11.1 billion and is part of the services sector and leisure industry. The stock has a beta of 1.47 and a short float of 0.5% with 1.14 days to cover. Shares are up 44.1% year-to-date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Tim Hortons as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations and solid stock price performance. We feel these 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 9.6%. Since the same quarter one year prior, revenues rose by 10.2%. 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.
  • Compared to its closing price of one year ago, THI's share price has jumped by 39.70%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, THI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, TIM HORTONS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $219.91 million or 22.29% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -17.73%.
  • TIM HORTONS INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, TIM HORTONS INC increased its bottom line by earning $2.81 versus $2.58 in the prior year.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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