Trade-Ideas LLC identified

LendingClub

(

LC

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

  • LC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $67.5 million.
  • LC has traded 6.8 million shares today.
  • LC traded in a range 217.5% of the normal price range with a price range of $1.27.
  • LC traded above its daily resistance level (quality: 4 days, meaning that the stock is crossing a resistance level set by the last 4 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 LC:

LendingClub Corporation operates as an online marketplace for connecting borrowers and investors in the United States. Currently there are 9 analysts that rate LendingClub a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for LendingClub has been 5.3 million shares per day over the past 30 days. LendingClub has a market cap of $3.0 billion and is part of the financial sector and financial services industry. Shares are down 33.6% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates LendingClub as a

sell

. Among the areas we feel are negative, one of the most important has been very high debt management risk by most measures.

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 4.03 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • The gross profit margin for LENDINGCLUB CORP is rather high; currently it is at 58.84%. Regardless of LC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LC's net profit margin of 0.36% is significantly lower than the industry average.
  • Compared to other companies in the Consumer Finance industry and the overall market, LENDINGCLUB CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • LC's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 61.92%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter.
  • LENDINGCLUB CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($0.13 versus -$0.08).

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