Barbarian At The Gate: Life Time Fitness (LTM)

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 Life Time Fitness ( LTM) 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 Life Time Fitness as such a stock due to the following factors:

  • LTM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $25.6 million.
  • LTM has traded 105,059 shares today.
  • LTM traded in a range 201.1% of the normal price range with a price range of $2.17.
  • LTM traded above its daily resistance level (quality: 33 days, meaning that the stock is crossing a resistance level set by the last 33 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 LTM:

Life Time Fitness, Inc. designs, builds, and operates sports and athletic, professional fitness, family recreation, and spa centers. LTM has a PE ratio of 15.3. Currently there are 7 analysts that rate Life Time Fitness a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Life Time Fitness has been 473,900 shares per day over the past 30 days. Life Time Fitness has a market cap of $1.9 billion and is part of the services sector and leisure industry. The stock has a beta of 1.04 and a short float of 23% with 14.67 days to cover. Shares are down 7.5% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Life Time Fitness as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, reasonable valuation levels, good cash flow from operations and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 4.2%. Since the same quarter one year prior, revenues slightly increased by 7.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • LIFE TIME FITNESS INC has improved earnings per share by 7.8% 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, LIFE TIME FITNESS INC increased its bottom line by earning $2.68 versus $2.26 in the prior year. This year, the market expects an improvement in earnings ($2.92 versus $2.68).
  • Net operating cash flow has slightly increased to $66.31 million or 9.29% when compared to the same quarter last year. In addition, LIFE TIME FITNESS INC has also vastly surpassed the industry average cash flow growth rate of -106.62%.
  • The net income growth from the same quarter one year ago has exceeded that of the Hotels, Restaurants & Leisure industry average, but is less than that of the S&P 500. The net income increased by 7.0% when compared to the same quarter one year prior, going from $32.14 million to $34.39 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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