Trade-Ideas LLC identified

Validus Holdings

(

VR

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

  • VR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $30.0 million.
  • VR has traded 96,576 shares today.
  • VR traded in a range 232.6% of the normal price range with a price range of $2.22.
  • VR traded above its daily resistance level (quality: 9 days, meaning that the stock is crossing a resistance level set by the last 9 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 VR:

TheStreet Recommends

Validus Holdings, Ltd. provides reinsurance coverage, insurance coverage, and insurance linked securities management services worldwide. It operates through four segments: Validus Re, AlphaCat, Talbot, and Western World. The stock currently has a dividend yield of 3%. VR has a PE ratio of 9. Currently there is 1 analyst that rates Validus Holdings a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Validus Holdings has been 518,800 shares per day over the past 30 days. Validus has a market cap of $3.5 billion and is part of the financial sector and insurance industry. The stock has a beta of 0.64 and a short float of 1.1% with 1.31 days to cover. Shares are down 5.5% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Validus Holdings as a

buy

. 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 its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 15.7%. Since the same quarter one year prior, revenues rose by 18.6%. 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. 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.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Insurance industry. The net income increased by 68.0% when compared to the same quarter one year prior, rising from $39.67 million to $66.65 million.
  • Net operating cash flow has significantly increased by 113.62% to $280.72 million when compared to the same quarter last year. In addition, VALIDUS HOLDINGS LTD has also vastly surpassed the industry average cash flow growth rate of -13.39%.
  • VALIDUS HOLDINGS LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, VALIDUS HOLDINGS LTD increased its bottom line by earning $5.06 versus $4.88 in the prior year. For the next year, the market is expecting a contraction of 6.1% in earnings ($4.75 versus $5.06).

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