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 NetApp ( NTAP) 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 NetApp as such a stock due to the following factors:
- NTAP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $215.5 million.
- NTAP has traded 6.5 million shares today.
- NTAP traded in a range 216.5% of the normal price range with a price range of $1.54.
- NTAP traded above its daily resistance level (quality: 41 days, meaning that the stock is crossing a resistance level set by the last 41 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. EXCLUSIVE OFFER: Get the inside scoop on opportunities in NTAP with the Ticky from Trade-Ideas. See the FREE profile for NTAP NOW at Trade-Ideas More details on NTAP: NetApp, Inc. engages in design, manufacture, and marketing of networked storage solutions. The company supplies enterprise storage and data management software and hardware products and services. The stock currently has a dividend yield of 1.5%. NTAP has a PE ratio of 27.9. Currently there are 10 analysts that rate NetApp a buy, 2 analysts rate it a sell, and 14 rate it a hold. The average volume for NetApp has been 5.0 million shares per day over the past 30 days. NetApp has a market cap of $13.6 billion and is part of the technology sector and computer hardware industry. The stock has a beta of 1.95 and a short float of 6.3% with 2.27 days to cover. Shares are up 18.8% year to date as of the close of trading on Tuesday. 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 NetApp as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in net income, good cash flow from operations and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook. Highlights from the ratings report include:
- NTAP's revenue growth has slightly outpaced the industry average of 2.9%. Since the same quarter one year prior, revenues slightly increased by 5.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Although NTAP's debt-to-equity ratio of 0.25 is very low, it is currently higher than that of the industry average. To add to this, NTAP has a quick ratio of 2.41, which demonstrates the ability of the company to cover short-term liquidity needs.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Computers & Peripherals industry average. The net income increased by 27.9% when compared to the same quarter one year prior, rising from $63.80 million to $81.60 million.
- Net operating cash flow has increased to $285.80 million or 24.69% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 6.99%.
- The gross profit margin for NETAPP INC is rather high; currently it is at 65.66%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, NTAP's net profit margin of 5.38% significantly trails the industry average.
- You can view the full NetApp Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.