Trade-Ideas LLC identified

A O Smith

(

AOS

) 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 A O Smith as such a stock due to the following factors:

  • AOS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $100.9 million.
  • AOS has traded 262,766 shares today.
  • AOS traded in a range 215.4% of the normal price range with a price range of $6.20.
  • AOS traded above its daily resistance level (quality: 20 days, meaning that the stock is crossing a resistance level set by the last 20 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 AOS:

TST Recommends

A. O. Smith Corporation manufactures and markets water heaters and boilers to the residential and commercial end markets primarily in the United States, Canada, China, Europe, India, and the Middle East. It operates in two segments, North America and Rest of World. The stock currently has a dividend yield of 1.4%. AOS has a PE ratio of 23. Currently there are 8 analysts that rate A O Smith a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for A O Smith has been 833,700 shares per day over the past 30 days. A O Smith has a market cap of $4.9 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.61 and a short float of 3.9% with 1.90 days to cover. Shares are down 11.4% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates A O Smith as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:

  • AOS's revenue growth has slightly outpaced the industry average of 6.6%. Since the same quarter one year prior, revenues slightly increased by 7.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • AOS's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, AOS has a quick ratio of 1.74, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. 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.
  • SMITH (A O) CORP has improved earnings per share by 46.4% 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 two years. We feel that this trend should continue. During the past fiscal year, SMITH (A O) CORP increased its bottom line by earning $2.29 versus $1.83 in the prior year. This year, the market expects an improvement in earnings ($3.10 versus $2.29).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Building Products industry. The net income increased by 45.5% when compared to the same quarter one year prior, rising from $50.60 million to $73.60 million.

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