Trade-Ideas LLC identified

Universal Forest Products

(

UFPI

) 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 Universal Forest Products as such a stock due to the following factors:

  • UFPI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.3 million.
  • UFPI has traded 69,860 shares today.
  • UFPI traded in a range 225.2% of the normal price range with a price range of $5.78.
  • UFPI traded above its daily resistance level (quality: 528 days, meaning that the stock is crossing a resistance level set by the last 528 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 UFPI:

Universal Forest Products, Inc., through its subsidiaries, designs, manufactures, and markets wood and wood-alternative products for home centers and other retailers. The stock currently has a dividend yield of 0.8%. UFPI has a PE ratio of 23. Currently there are no analysts that rate Universal Forest Products a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Universal Forest Products has been 172,700 shares per day over the past 30 days. Universal Forest has a market cap of $2.1 billion and is part of the industrial goods sector and materials & construction industry. Shares are up 45.6% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Universal Forest Products as a

buy

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • Powered by its strong earnings growth of 28.12% and other important driving factors, this stock has surged by 66.87% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, UFPI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • UNIVERSAL FOREST PRODS INC has improved earnings per share by 28.1% 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, UNIVERSAL FOREST PRODS INC increased its bottom line by earning $3.98 versus $2.86 in the prior year. This year, the market expects an improvement in earnings ($4.61 versus $3.98).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.6%. Since the same quarter one year prior, revenues slightly increased by 4.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • UFPI's debt-to-equity ratio is very low at 0.10 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, UFPI has a quick ratio of 1.74, which demonstrates the ability of the company to cover short-term liquidity needs.

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