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
) 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 KAR Auction Services as such a stock due to the following factors:
- KAR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $48.4 million.
- KAR has traded 74,018 shares today.
- KAR traded in a range 200.1% of the normal price range with a price range of $1.32.
- KAR traded above its daily resistance level (quality: 526 days, meaning that the stock is crossing a resistance level set by the last 526 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 KAR:
KAR Auction Services, Inc., together with its subsidiaries, provides vehicle auction services in North America. It operates in three segments: ADESA Auctions, IAA, and AFC. The stock currently has a dividend yield of 3.2%. KAR has a PE ratio of 47.6. Currently there are 6 analysts that rate KAR Auction Services a buy, no analysts rate it a sell, and none rate it a hold.
The average volume for KAR Auction Services has been 1.2 million shares per day over the past 30 days. KAR Auction Services has a market cap of $4.8 billion and is part of the services sector and specialty retail industry. The stock has a beta of 1.76 and a short float of 0.4% with 0.36 days to cover. Shares are up 17.4% year-to-date as of the close of trading on Wednesday.
rates KAR Auction Services as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, increase in net income, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- KAR's revenue growth has slightly outpaced the industry average of 8.3%. Since the same quarter one year prior, revenues rose by 10.4%. 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 Commercial Services & Supplies industry. The net income increased by 108.3% when compared to the same quarter one year prior, rising from $22.80 million to $47.50 million.
- Net operating cash flow has remained constant at $96.30 million with no significant change when compared to the same quarter last year. In addition, KAR AUCTION SERVICES INC has modestly surpassed the industry average cash flow growth rate of -8.11%.
- KAR AUCTION SERVICES INC 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, KAR AUCTION SERVICES INC reported lower earnings of $0.48 versus $0.66 in the prior year. This year, the market expects an improvement in earnings ($1.52 versus $0.48).
- You can view the full KAR Auction Services Ratings Report.