Watch Out: Barbarians At The Gate For ITC Holdings (ITC) - TheStreet

Trade-Ideas LLC identified

ITC Holdings

(

ITC

) 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 ITC Holdings as such a stock due to the following factors:

  • ITC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $56.6 million.
  • ITC has traded 1.0 million shares today.
  • ITC traded in a range 243.9% of the normal price range with a price range of $1.77.
  • ITC traded above its daily resistance level (quality: 104 days, meaning that the stock is crossing a resistance level set by the last 104 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 ITC:

ITC Holdings Corp., together with its subsidiaries, engages in the transmission of electricity in the United States. The stock currently has a dividend yield of 2.2%. ITC has a PE ratio of 21. Currently there are 6 analysts that rate ITC Holdings a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for ITC Holdings has been 1.5 million shares per day over the past 30 days. ITC has a market cap of $5.2 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.06 and a short float of 2.3% with 2.25 days to cover. Shares are down 16.5% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates ITC Holdings as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • ITC's revenue growth has slightly outpaced the industry average of 0.8%. Since the same quarter one year prior, revenues slightly increased by 1.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $188.89 million or 14.52% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -7.99%.
  • ITC HOLDINGS CORP's earnings per share declined by 10.6% 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, ITC HOLDINGS CORP increased its bottom line by earning $1.54 versus $1.47 in the prior year. This year, the market expects an improvement in earnings ($2.06 versus $1.54).
  • The gross profit margin for ITC HOLDINGS CORP is rather high; currently it is at 68.28%. Regardless of ITC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ITC's net profit margin of 24.00% compares favorably to the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Electric Utilities industry and the overall market, ITC HOLDINGS CORP's return on equity exceeds that of both the industry average and the S&P 500.

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