Watch Out: Barbarians At The Gate For Thor Industries (THO)

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 Thor Industries ( THO) 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 Thor Industries as such a stock due to the following factors:

  • THO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.9 million.
  • THO has traded 56,911 shares today.
  • THO traded in a range 203.1% of the normal price range with a price range of $2.55.
  • THO traded above its daily resistance level (quality: 5 days, meaning that the stock is crossing a resistance level set by the last 5 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 THO:

Thor Industries, Inc., together with its subsidiaries, designs, manufactures, and sells a range of recreational vehicles, and related parts and accessories in the United States and Canada. It operates through two segments, Towable Recreational Vehicles and Motorized Recreational Vehicles. The stock currently has a dividend yield of 1.8%. THO has a PE ratio of 17.1. Currently there are 3 analysts that rate Thor Industries a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Thor Industries has been 404,100 shares per day over the past 30 days. Thor has a market cap of $2.7 billion and is part of the consumer goods sector and automotive industry. Shares are down 11.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Thor Industries 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, notable return on equity, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 14.1%. Since the same quarter one year prior, revenues slightly increased by 5.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • THO has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.44, which illustrates the ability to avoid short-term cash problems.
  • 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. In comparison to the other companies in the Automobiles industry and the overall market, THOR INDUSTRIES INC's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • THOR INDUSTRIES INC has improved earnings per share by 25.9% 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, THOR INDUSTRIES INC increased its bottom line by earning $2.85 versus $2.28 in the prior year. This year, the market expects an improvement in earnings ($3.50 versus $2.85).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Automobiles industry average. The net income increased by 32.6% when compared to the same quarter one year prior, rising from $30.99 million to $41.11 million.

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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