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 Varian Medical Systems ( VAR) 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 Varian Medical Systems as such a stock due to the following factors:
- VAR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $47.0 million.
- VAR has traded 523,640 shares today.
- VAR traded in a range 230.7% of the normal price range with a price range of $3.03.
- VAR traded above its daily resistance level (quality: 533 days, meaning that the stock is crossing a resistance level set by the last 533 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. EXCLUSIVE OFFER: Get the inside scoop on opportunities in VAR with the Ticky from Trade-Ideas. See the FREE profile for VAR NOW at Trade-Ideas More details on VAR: Varian Medical Systems, Inc. designs, manufactures, sells, and services medical devices and software for treating cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy, and brachytherapy worldwide. VAR has a PE ratio of 20.6. Currently there are 7 analysts that rate Varian Medical Systems a buy, 1 analyst rates it a sell, and none rate it a hold. The average volume for Varian Medical Systems has been 793,700 shares per day over the past 30 days. Varian Medical Systems has a market cap of $8.6 billion and is part of the health care sector and health services industry. The stock has a beta of 0.85 and a short float of 5.2% with 9.81 days to cover. Shares are up 6.7% 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 Varian Medical Systems 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, growth in earnings per share, expanding profit margins and increase in stock price during the past year. 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 25.5%. Since the same quarter one year prior, revenues slightly increased by 4.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- VAR's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, VAR has a quick ratio of 1.55, which demonstrates the ability of the company to cover short-term liquidity needs.
- VARIAN MEDICAL SYSTEMS INC has improved earnings per share by 5.8% 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, VARIAN MEDICAL SYSTEMS INC increased its bottom line by earning $3.99 versus $3.77 in the prior year. This year, the market expects an improvement in earnings ($4.30 versus $3.99).
- 45.77% is the gross profit margin for VARIAN MEDICAL SYSTEMS INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 13.76% trails the industry average.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full Varian Medical Systems Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.