Trade-Ideas LLC identified

Pinnacle Foods

(

PF

) 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 Pinnacle Foods as such a stock due to the following factors:

  • PF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $48.1 million.
  • PF has traded 381,882 shares today.
  • PF traded in a range 254.8% of the normal price range with a price range of $1.72.
  • PF traded above its daily resistance level (quality: 282 days, meaning that the stock is crossing a resistance level set by the last 282 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 PF:

Pinnacle Foods Inc., through its subsidiaries, manufactures, markets, and distributes branded convenience food products in North America. It operates through three segments: Birds Eye Frozen, Duncan Hines Grocery, and Specialty Foods. The stock currently has a dividend yield of 2.3%. PF has a PE ratio of 26. Currently there are 4 analysts that rate Pinnacle Foods a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Pinnacle Foods has been 1.0 million shares per day over the past 30 days. Pinnacle has a market cap of $5.1 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.31 and a short float of 2% with 2.64 days to cover. Shares are up 5% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Pinnacle Foods as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 16.6%. Since the same quarter one year prior, revenues rose by 13.4%. 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 slightly increased to $76.76 million or 8.11% when compared to the same quarter last year. In addition, PINNACLE FOODS INC has also modestly surpassed the industry average cash flow growth rate of 3.11%.
  • PINNACLE FOODS INC's earnings per share declined by 40.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, PINNACLE FOODS INC reported lower earnings of $1.80 versus $2.12 in the prior year. This year, the market expects an improvement in earnings ($2.11 versus $1.80).
  • The gross profit margin for PINNACLE FOODS INC is currently lower than what is desirable, coming in at 30.55%. Regardless of PF's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.29% trails the industry average.

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