Watch Out: Barbarians At The Gate For Freescale Semiconductor (FSL) - TheStreet

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified

Freescale Semiconductor

(

FSL

) 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 Freescale Semiconductor as such a stock due to the following factors:

  • FSL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $70.8 million.
  • FSL has traded 525,228 shares today.
  • FSL traded in a range 203.8% of the normal price range with a price range of $1.93.
  • FSL traded above its daily resistance level (quality: 35 days, meaning that the stock is crossing a resistance level set by the last 35 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 FSL:

Freescale Semiconductor, Ltd. provides embedded processing solutions for automotive, networking, industrial, and consumer markets worldwide. FSL has a PE ratio of 115.9. Currently there are 6 analysts that rate Freescale Semiconductor a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Freescale Semiconductor has been 2.4 million shares per day over the past 30 days. Freescale Semiconductor has a market cap of $5.6 billion and is part of the technology sector and electronics industry. The stock has a beta of 2.62 and a short float of 19.4% with 5.95 days to cover. Shares are up 14% year-to-date as of the close of trading on Thursday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Freescale Semiconductor as a

hold

. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth and expanding profit margins. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 443.5% when compared to the same quarter one year prior, rising from $23.00 million to $125.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 17.7%. Since the same quarter one year prior, revenues rose by 11.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 49.96% is the gross profit margin for FREESCALE SEMICONDUCTOR LTD which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, FSL's net profit margin of 10.30% significantly trails the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • FREESCALE SEMICONDUCTOR LTD 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, FREESCALE SEMICONDUCTOR LTD reported poor results of -$0.81 versus -$0.42 in the prior year. This year, the market expects an improvement in earnings ($1.50 versus -$0.81).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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