Trade-Ideas LLC identified

Freeport-McMoRan

(

FCX

) 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 Freeport-McMoRan as such a stock due to the following factors:

  • FCX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $423.4 million.
  • FCX has traded 47.4 million shares today.
  • FCX traded in a range 214.3% of the normal price range with a price range of $1.38.
  • FCX traded above its daily resistance level (quality: 3 days, meaning that the stock is crossing a resistance level set by the last 3 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 FCX:

Freeport-McMoRan Inc., a natural resource company, acquires, explores, and develops mineral assets, and oil and natural gas resources. The company explores for copper, gold, molybdenum, cobalt hydroxide, silver, and other metals, as well as oil and gas. The stock currently has a dividend yield of 3%. Currently there are 3 analysts that rate Freeport-McMoRan a buy, 1 analyst rates it a sell, and 11 rate it a hold.

The average volume for Freeport-McMoRan has been 40.9 million shares per day over the past 30 days. Freeport-McMoRan has a market cap of $15.9 billion and is part of the basic materials sector and metals & mining industry. The stock has a beta of 2.64 and a short float of 10.4% with 3.29 days to cover. Shares are up 82.9% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Freeport-McMoRan as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 5.63 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, FCX has a quick ratio of 0.56, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Metals & Mining industry and the overall market, FREEPORT-MCMORAN INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of FREEPORT-MCMORAN INC has not done very well: it is down 18.13% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • FREEPORT-MCMORAN INC's earnings per share declined by 40.8% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, FREEPORT-MCMORAN INC reported poor results of -$11.21 versus -$1.27 in the prior year. This year, the market expects an improvement in earnings ($0.46 versus -$11.21).
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Metals & Mining industry average, but is less than that of the S&P 500. The net income has significantly decreased by 69.1% when compared to the same quarter one year ago, falling from -$2,474.00 million to -$4,184.00 million.

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