Barbarian At The Gate: Vulcan Materials Company (VMC)

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 Vulcan Materials Company ( VMC) 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 Vulcan Materials Company as such a stock due to the following factors:

  • VMC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $31.0 million.
  • VMC has traded 1.2 million shares today.
  • VMC traded in a range 241% of the normal price range with a price range of $2.87.
  • VMC traded above its daily resistance level (quality: 272 days, meaning that the stock is crossing a resistance level set by the last 272 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 VMC:

Vulcan Materials Company engages in the production and sale of construction aggregates, as well as asphalt mix, ready-mixed concrete, and cement primarily in the United States. The company operates in four segments: Aggregates, Concrete, Asphalt Mix, and Cement. The stock currently has a dividend yield of 0.1%. Currently there are 2 analysts that rate Vulcan Materials Company a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Vulcan Materials Company has been 592,300 shares per day over the past 30 days. Vulcan has a market cap of $7.0 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.57 and a short float of 4.7% with 11.00 days to cover. Shares are up 2.9% year to date as of the close of trading on Friday.

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 Vulcan Materials Company as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income. 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:
  • The revenue growth came in higher than the industry average of 11.2%. Since the same quarter one year prior, revenues slightly increased by 6.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • VULCAN MATERIALS CO 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, VULCAN MATERIALS CO continued to lose money by earning -$0.42 versus -$0.58 in the prior year. This year, the market expects an improvement in earnings (-$0.08 versus -$0.42).
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The gross profit margin for VULCAN MATERIALS CO is currently lower than what is desirable, coming in at 28.41%. Regardless of VMC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, VMC's net profit margin of 3.89% compares favorably to the industry average.
  • Net operating cash flow has declined marginally to -$32.48 million or 0.84% when compared to the same quarter last year. Despite a decrease in cash flow VULCAN MATERIALS CO is still fairing well by exceeding its industry average cash flow growth rate of -27.75%.

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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