Trade-Ideas LLC identified

LKQ

(

LKQ

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

  • LKQ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $282.7 million.
  • LKQ has traded 698,219 shares today.
  • LKQ traded in a range 200.4% of the normal price range with a price range of $1.35.
  • LKQ traded above its daily resistance level (quality: 27 days, meaning that the stock is crossing a resistance level set by the last 27 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 LKQ:

LKQ Corporation, together with its subsidiaries, distributes replacement parts, components, and systems used in the repair and maintenance of vehicles in the United States, the United Kingdom, and internationally. It operates in three segments: North America, Europe, and Specialty. LKQ has a PE ratio of 23. Currently there are 9 analysts that rate LKQ a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for LKQ has been 3.1 million shares per day over the past 30 days. LKQ has a market cap of $9.9 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 0.88 and a short float of 1.3% with 0.55 days to cover. Shares are up 11.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates LKQ as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, expanding profit margins, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • LKQ's revenue growth has slightly outpaced the industry average of 1.3%. Since the same quarter one year prior, revenues slightly increased by 8.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • 39.65% is the gross profit margin for LKQ CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 5.60% is above that of the industry average.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Distributors industry average. The net income increased by 0.6% when compared to the same quarter one year prior, going from $107.10 million to $107.73 million.
  • LKQ CORP reported flat earnings per share in the most recent quarter. 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, LKQ CORP increased its bottom line by earning $1.38 versus $1.24 in the prior year. This year, the market expects an improvement in earnings ($1.81 versus $1.38).
  • 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, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

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