Watch Out: Barbarians At The Gate For AmerisourceBergen (ABC) - TheStreet

Trade-Ideas LLC identified

AmerisourceBergen

(

ABC

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

  • ABC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $246.2 million.
  • ABC has traded 2.1 million shares today.
  • ABC traded in a range 226.1% of the normal price range with a price range of $3.85.
  • ABC traded above its daily resistance level (quality: 28 days, meaning that the stock is crossing a resistance level set by the last 28 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 ABC:

AmerisourceBergen Corporation sources and distributes pharmaceutical products to healthcare providers, pharmaceutical and biotech manufacturers, and specialty drug patients in the United States and internationally. The stock currently has a dividend yield of 1.2%. Currently there are 6 analysts that rate AmerisourceBergen a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for AmerisourceBergen has been 2.3 million shares per day over the past 30 days. AmerisourceBergen has a market cap of $20.1 billion and is part of the services sector and wholesale industry. The stock has a beta of 0.85 and a short float of 4.1% with 4.38 days to cover. Shares are up 3.3% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates AmerisourceBergen as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, solid stock price performance, increase in net income and growth in earnings per share. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:

  • ABC's revenue growth has slightly outpaced the industry average of 10.2%. Since the same quarter one year prior, revenues rose by 12.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 1775.8% when compared to the same quarter one year prior, rising from -$12.78 million to $214.16 million.
  • Net operating cash flow has significantly increased by 115.75% to $1,121.58 million when compared to the same quarter last year. In addition, AMERISOURCEBERGEN CORP has also vastly surpassed the industry average cash flow growth rate of -5.17%.
  • AMERISOURCEBERGEN CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, AMERISOURCEBERGEN CORP reported lower earnings of $1.20 versus $2.10 in the prior year. This year, the market expects an improvement in earnings ($4.97 versus $1.20).

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