Watch Out: Barbarians At The Gate For Bemis (BMS)

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 Bemis ( BMS) 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 Bemis as such a stock due to the following factors:

  • BMS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $37.1 million.
  • BMS has traded 66,748 shares today.
  • BMS traded in a range 201.4% of the normal price range with a price range of $1.24.
  • BMS traded above its daily resistance level (quality: 14 days, meaning that the stock is crossing a resistance level set by the last 14 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 BMS:

Bemis Company, Inc. manufactures and sells flexible packaging products and pressure sensitive materials in North America, Latin America, Europe, and the Asia Pacific. The company operates in three segments: U.S. Packaging, Global Packaging, and Pressure Sensitive Materials. The stock currently has a dividend yield of 2.8%. BMS has a PE ratio of 19.9. Currently there are no analysts that rate Bemis a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Bemis has been 625,200 shares per day over the past 30 days. Bemis has a market cap of $3.9 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 0.33 and a short float of 4.4% with 5.07 days to cover. Shares are down 7.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Bemis as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations, impressive record of earnings per share growth and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The debt-to-equity ratio is somewhat low, currently at 0.86, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.22, which illustrates the ability to avoid short-term cash problems.
  • BEMIS CO INC has improved earnings per share by 15.6% in the most recent quarter compared to 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, BEMIS CO INC reported lower earnings of $1.65 versus $1.73 in the prior year. This year, the market expects an improvement in earnings ($2.27 versus $1.65).
  • Net operating cash flow has slightly increased to $160.00 million or 8.91% when compared to the same quarter last year. Despite an increase in cash flow, BEMIS CO INC's cash flow growth rate is still lower than the industry average growth rate of 36.90%.
  • BMS, with its decline in revenue, slightly underperformed the industry average of 3.4%. Since the same quarter one year prior, revenues slightly dropped by 2.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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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