Trade-Ideas: LPL Financial Holdings (LPLA) Is Today's

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 LPL Financial Holdings ( LPLA) 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 LPL Financial Holdings as such a stock due to the following factors:

  • LPLA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $32.2 million.
  • LPLA has traded 73,030 shares today.
  • LPLA traded in a range 344.5% of the normal price range with a price range of $1.81.
  • LPLA traded above its daily resistance level (quality: 3 days, meaning that the stock is crossing a resistance level set by the last 3 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 LPLA:

LPL Financial Holdings Inc. provides an integrated platform of brokerage and investment advisory services to independent financial advisors and financial advisors at financial institutions in the United States. The stock currently has a dividend yield of 2%. LPLA has a PE ratio of 24.2. Currently there are 2 analysts that rate LPL Financial Holdings a buy, 2 analysts rate it a sell, and 5 rate it a hold.

The average volume for LPL Financial Holdings has been 607,800 shares per day over the past 30 days. LPL Financial has a market cap of $4.0 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.32 and a short float of 2% with 1.39 days to cover. Shares are up 35.5% year to date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates LPL Financial Holdings as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and notable return on equity. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.3%. Since the same quarter one year prior, revenues rose by 12.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Capital Markets industry and the overall market, LPL FINANCIAL HOLDINGS INC's return on equity exceeds that of both the industry average and the S&P 500.
  • LPL FINANCIAL HOLDINGS INC has improved earnings per share by 20.0% 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, LPL FINANCIAL HOLDINGS INC reported lower earnings of $1.37 versus $1.50 in the prior year. This year, the market expects an improvement in earnings ($2.32 versus $1.37).
  • The gross profit margin for LPL FINANCIAL HOLDINGS INC is currently extremely low, coming in at 12.30%. Regardless of LPLA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, LPLA's net profit margin of 4.42% is significantly lower than the industry average.
  • Net operating cash flow has significantly decreased to -$11.63 million or 113.81% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
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