Watch Out: Barbarians At The Gate For Wabco Holdings Incorporated (WBC)

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 Wabco Holdings Incorporated ( WBC) 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 Wabco Holdings Incorporated as such a stock due to the following factors:

  • WBC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $41.2 million.
  • WBC has traded 189,657 shares today.
  • WBC traded in a range 207.1% of the normal price range with a price range of $4.13.
  • WBC traded above its daily resistance level (quality: 20 days, meaning that the stock is crossing a resistance level set by the last 20 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 WBC:

WABCO Holdings Inc., together with its subsidiaries, provides electronic, mechanical, and mechatronic products for commercial truck, trailer, bus, and passenger car manufacturers worldwide. WBC has a PE ratio of 19.2. Currently there are 4 analysts that rate Wabco Holdings Incorporated a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Wabco Holdings Incorporated has been 418,200 shares per day over the past 30 days. Wabco has a market cap of $5.6 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 2.38 and a short float of 0.6% with 0.89 days to cover. Shares are down 3.6% 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 Wabco Holdings Incorporated 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, solid stock price performance, growth in earnings per share and increase 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 greatly exceeded the industry average of 18.3%. Since the same quarter one year prior, revenues rose by 15.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • WBC's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.43, which illustrates the ability to avoid short-term cash problems.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 33.37% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, WBC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • WABCO HOLDINGS INC has improved earnings per share by 5.9% 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, WABCO HOLDINGS INC reported lower earnings of $4.61 versus $5.18 in the prior year. This year, the market expects an improvement in earnings ($5.00 versus $4.61).
  • The net income growth from the same quarter one year ago has exceeded that of the Machinery industry average, but is less than that of the S&P 500. The net income increased by 3.2% when compared to the same quarter one year prior, going from $77.50 million to $80.00 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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