Watch Out: Barbarians At The Gate For Iron Mountain (IRM)

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 Iron Mountain ( IRM) 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 Iron Mountain as such a stock due to the following factors:

  • IRM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $43.2 million.
  • IRM has traded 1.7 million shares today.
  • IRM traded in a range 265.4% of the normal price range with a price range of $1.56.
  • IRM traded above its daily resistance level (quality: 48 days, meaning that the stock is crossing a resistance level set by the last 48 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 IRM:

Iron Mountain Incorporated, together with its subsidiaries, provides information management services primarily in North America, Europe, Latin America, and the Asia Pacific. The stock currently has a dividend yield of 4%. IRM has a PE ratio of 142.1. Currently there are 4 analysts that rate Iron Mountain a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Iron Mountain has been 1.6 million shares per day over the past 30 days. Iron Mountain has a market cap of $5.2 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.57 and a short float of 8.9% with 8.50 days to cover. Shares are down 13% year to date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Iron Mountain as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and generally higher debt management risk.

Highlights from the ratings report include:
  • IRM's revenue growth has slightly outpaced the industry average of 6.8%. Since the same quarter one year prior, revenues slightly increased by 1.0%. 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.
  • Net operating cash flow has increased to $120.68 million or 36.29% when compared to the same quarter last year. In addition, IRON MOUNTAIN INC has also vastly surpassed the industry average cash flow growth rate of -17.15%.
  • The gross profit margin for IRON MOUNTAIN INC is rather high; currently it is at 58.89%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 0.53% trails the industry average.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Commercial Services & Supplies industry and the overall market, IRON MOUNTAIN INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The share price of IRON MOUNTAIN INC has not done very well: it is down 22.66% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

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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