Alere (ALR) Marked As A Barbarian At The Gate

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 Alere ( ALR) 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 Alere as such a stock due to the following factors:

  • ALR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.2 million.
  • ALR has traded 377,197 shares today.
  • ALR traded in a range 255.3% of the normal price range with a price range of $1.86.
  • ALR traded above its daily resistance level (quality: 89 days, meaning that the stock is crossing a resistance level set by the last 89 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 ALR:

Alere Inc. provides diagnostics and services for cardiology, infectious disease, toxicology, and diabetes in the United States and internationally. The company operates in three segments: Professional Diagnostics, Health Information Solutions, and Consumer Diagnostics. Currently there are 3 analysts that rate Alere a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Alere has been 632,200 shares per day over the past 30 days. Alere has a market cap of $2.6 billion and is part of the health care sector and health services industry. The stock has a beta of 2.76 and a short float of 6.7% with 7.77 days to cover. Shares are up 69.4% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Alere as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and generally higher debt management risk.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 26.9%. Since the same quarter one year prior, revenues slightly increased by 9.1%. 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, ALR's share price has jumped by 61.83%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • ALERE INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, ALERE INC continued to lose money by earning -$1.23 versus -$2.15 in the prior year. This year, the market expects an improvement in earnings ($2.36 versus -$1.23).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income has significantly decreased by 369.0% when compared to the same quarter one year ago, falling from -$12.92 million to -$60.57 million.
  • Net operating cash flow has significantly decreased to $27.70 million or 56.92% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, ALERE INC has marginally lower results.

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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