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
) 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 Mercadolibre as such a stock due to the following factors:
- MELI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $104.7 million.
- MELI has traded 1.3 million shares today.
- MELI traded in a range 223.7% of the normal price range with a price range of $7.15.
- MELI traded above its daily resistance level (quality: 90 days, meaning that the stock is crossing a resistance level set by the last 90 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 MELI:
MercadoLibre, Inc. hosts online commerce platforms in Latin America. Its services are designed to provide users with mechanisms for buying, selling, paying, collecting, generating leads, and comparing listings through e-commerce transactions. The stock currently has a dividend yield of 0.6%. MELI has a PE ratio of 39.0. Currently there are 2 analysts that rate Mercadolibre a buy, 3 analysts rate it a sell, and 2 rate it a hold.
The average volume for Mercadolibre has been 779,200 shares per day over the past 30 days. Mercadolibre has a market cap of $4.1 billion and is part of the services sector and retail industry. The stock has a beta of 2.12 and a short float of 29.7% with 9.43 days to cover. Shares are down 12.6% year-to-date as of the close of trading on Thursday.
rates Mercadolibre as a
. 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, growth in earnings per share, good cash flow from operations and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 16.5%. Since the same quarter one year prior, revenues rose by 26.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Although MELI's debt-to-equity ratio of 0.06 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.29, which illustrates the ability to avoid short-term cash problems.
- MERCADOLIBRE INC has improved earnings per share by 11.9% 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 two years. We feel that this trend should continue. During the past fiscal year, MERCADOLIBRE INC increased its bottom line by earning $2.30 versus $1.73 in the prior year. This year, the market expects an improvement in earnings ($2.59 versus $2.30).
- Net operating cash flow has significantly increased by 152.53% to $63.69 million when compared to the same quarter last year. In addition, MERCADOLIBRE INC has also vastly surpassed the industry average cash flow growth rate of 12.06%.
- The gross profit margin for MERCADOLIBRE INC is currently very high, coming in at 74.80%. Regardless of MELI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MELI's net profit margin of 23.79% compares favorably to the industry average.
- You can view the full Mercadolibre Ratings Report.