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 Allergan ( AGN) 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 Allergan as such a stock due to the following factors:
- AGN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $195.7 million.
- AGN has traded 1.3 million shares today.
- AGN traded in a range 252.6% of the normal price range with a price range of $4.37.
- AGN traded above its daily resistance level (quality: 224 days, meaning that the stock is crossing a resistance level set by the last 224 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 AGN with the Ticky from Trade-Ideas. See the FREE profile for AGN NOW at Trade-Ideas More details on AGN: Allergan, Inc. operates as a multi-specialty healthcare company primarily in the United States, Europe, Latin America, and the Asia Pacific. The stock currently has a dividend yield of 0.2%. AGN has a PE ratio of 23.4. Currently there are 9 analysts that rate Allergan a buy, no analysts rate it a sell, and 10 rate it a hold. The average volume for Allergan has been 2.0 million shares per day over the past 30 days. Allergan has a market cap of $29.4 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.65 and a short float of 1.2% with 1.85 days to cover. Shares are up 10.2% year-to-date as of the close of trading on Wednesday. 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 Allergan 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, impressive record of earnings per share growth, increase in net income and notable return on equity. 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:
- The revenue growth came in higher than the industry average of 2.3%. Since the same quarter one year prior, revenues rose by 13.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.43, which clearly demonstrates the ability to cover short-term cash needs.
- ALLERGAN INC has improved earnings per share by 34.1% 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. During the past fiscal year, ALLERGAN INC increased its bottom line by earning $3.57 versus $3.01 in the prior year. This year, the market expects an improvement in earnings ($4.76 versus $3.57).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Pharmaceuticals industry average. The net income increased by 20.2% when compared to the same quarter one year prior, going from $249.40 million to $299.80 million.
- 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 Pharmaceuticals industry and the overall market on the basis of return on equity, ALLERGAN INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- You can view the full Allergan 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.