Trade-Ideas LLC identified

Treehouse Foods

(

THS

) 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 Treehouse Foods as such a stock due to the following factors:

  • THS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $43.7 million.
  • THS has traded 593,989 shares today.
  • THS traded in a range 204.3% of the normal price range with a price range of $2.93.
  • THS traded above its daily resistance level (quality: 160 days, meaning that the stock is crossing a resistance level set by the last 160 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 THS:

TreeHouse Foods, Inc. operates as a food and beverage manufacturer in the United States and Canada. The company operates through North American Retail Grocery, Food Away From Home, and Industrial and Export segments. THS has a PE ratio of 33. Currently there are 10 analysts that rate Treehouse Foods a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Treehouse Foods has been 1.0 million shares per day over the past 30 days. Treehouse has a market cap of $4.9 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.72 and a short float of 9% with 10.20 days to cover. Shares are up 10.6% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Treehouse Foods as a

buy

. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • TREEHOUSE FOODS INC has improved earnings per share by 9.0% 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, TREEHOUSE FOODS INC increased its bottom line by earning $2.63 versus $2.20 in the prior year. This year, the market expects an improvement in earnings ($3.03 versus $2.63).
  • 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 Food Products industry average. The net income increased by 9.8% when compared to the same quarter one year prior, going from $33.92 million to $37.26 million.
  • The debt-to-equity ratio is somewhat low, currently at 0.67, 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 0.89 is somewhat weak and could be cause for future problems.
  • THS, with its decline in revenue, underperformed when compared the industry average of 8.3%. Since the same quarter one year prior, revenues slightly dropped by 4.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Food Products industry and the overall market, TREEHOUSE FOODS INC's return on equity is below that of both the industry average and the S&P 500.

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