SLM (SLM) Marked As A Barbarian At The Gate

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

  • SLM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $123.3 million.
  • SLM has traded 229,114 shares today.
  • SLM traded in a range 352.6% of the normal price range with a price range of $2.00.
  • SLM traded above its daily resistance level (quality: 11 days, meaning that the stock is crossing a resistance level set by the last 11 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 SLM:

SLM Corporation, also known as Sallie Mae, originates, acquires, finances, and services private education loans in the United States. The company operates through three segments: Consumer Lending, Business Services, and FFELP Loans. The stock currently has a dividend yield of 2.6%. SLM has a PE ratio of 7.9. Currently there are 4 analysts that rate SLM a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for SLM has been 4.1 million shares per day over the past 30 days. SLM has a market cap of $9.9 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.27 and a short float of 3.1% with 2.60 days to cover. Shares are down 13.4% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates SLM as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, notable return on equity, attractive valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, SLM's share price has jumped by 26.41%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SLM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • 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 Consumer Finance industry and the overall market, SLM CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for SLM CORP is rather high; currently it is at 67.60%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.50% is above that of the industry average.
  • SLM, with its decline in revenue, slightly underperformed the industry average of 3.2%. Since the same quarter one year prior, revenues slightly dropped by 6.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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