Trade-Ideas LLC identified

Rite Aid

(

RAD

) 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 Rite Aid as such a stock due to the following factors:

  • RAD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $156.8 million.
  • RAD has traded 9.8 million shares today.
  • RAD traded in a range 1016.2% of the normal price range with a price range of $2.14.
  • RAD traded above its daily resistance level (quality: 40 days, meaning that the stock is crossing a resistance level set by the last 40 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 RAD:

TheStreet Recommends

Rite Aid Corporation, through its subsidiaries, operates a chain of retail drugstores in the United States. RAD has a PE ratio of 3. Currently there are 5 analysts that rate Rite Aid a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Rite Aid has been 22.6 million shares per day over the past 30 days. Rite Aid has a market cap of $6.5 billion and is part of the services sector and retail industry. The stock has a beta of 2.00 and a short float of 3.9% with 1.51 days to cover. Shares are down 17.8% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Rite Aid as a

hold

. The company's strengths can be seen in multiple areas, such as its notable return on equity, revenue growth and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and poor profit margins.

Highlights from the ratings report include:

  • Compared to other companies in the Food & Staples Retailing industry and the overall market, RITE AID CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The revenue growth came in higher than the industry average of 3.3%. Since the same quarter one year prior, revenues rose by 17.5%. 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.
  • Compared to its closing price of one year ago, RAD's share price has jumped by 25.20%, exceeding the performance of the broader market during that same time frame. Although RAD had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • The gross profit margin for RITE AID CORP is currently lower than what is desirable, coming in at 26.75%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.28% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$26.26 million or 121.44% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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