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

Big Lots

(

BIG

) 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 Big Lots as such a stock due to the following factors:

  • BIG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $53.8 million.
  • BIG has traded 241,543 shares today.
  • BIG traded in a range 202.4% of the normal price range with a price range of $1.97.
  • BIG traded above its daily resistance level (quality: 1 day, meaning that the stock is crossing a resistance level set by the last 1 calendar day. 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 BIG:

Big Lots, Inc., through its subsidiaries, operates as a non-traditional, discount retailer in the United States. The stock currently has a dividend yield of 1.7%. BIG has a PE ratio of 18. Currently there are 9 analysts that rate Big Lots a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Big Lots has been 911,200 shares per day over the past 30 days. Big Lots has a market cap of $2.4 billion and is part of the services sector and retail industry. The stock has a beta of 1.18 and a short float of 14.3% with 6.77 days to cover. Shares are up 12.6% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Big Lots as a

buy

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, revenue growth and attractive valuation levels. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • BIG LOTS INC has improved earnings per share by 21.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, BIG LOTS INC increased its bottom line by earning $2.51 versus $2.44 in the prior year. This year, the market expects an improvement in earnings ($2.87 versus $2.51).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Multiline Retail industry average. The net income increased by 11.9% when compared to the same quarter one year prior, going from $84.35 million to $94.43 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 2.1%. Since the same quarter one year prior, revenues slightly increased by 1.4%. Growth in the company's revenue appears to have helped boost the earnings per share.

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