Watch Out: Barbarians At The Gate For Lamar Advertising (LAMR)

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 Lamar Advertising ( LAMR) 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 Lamar Advertising as such a stock due to the following factors:

  • LAMR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $56.3 million.
  • LAMR has traded 730,640 shares today.
  • LAMR traded in a range 207.4% of the normal price range with a price range of $1.85.
  • LAMR traded above its daily resistance level (quality: 50 days, meaning that the stock is crossing a resistance level set by the last 50 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 LAMR:

Lamar Advertising Company operates as an outdoor advertising company in the United States. LAMR has a PE ratio of 116.9. Currently there are 7 analysts that rate Lamar Advertising a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Lamar Advertising has been 1.1 million shares per day over the past 30 days. Lamar Advertising has a market cap of $4.0 billion and is part of the services sector and media industry. The stock has a beta of 2.35 and a short float of 9.2% with 5.94 days to cover. Shares are down 3.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Lamar Advertising as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and expanding profit margins. 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:
  • LAMR's revenue growth has slightly outpaced the industry average of 4.4%. Since the same quarter one year prior, revenues slightly increased by 5.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • LAMAR ADVERTISING CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, LAMAR ADVERTISING CO increased its bottom line by earning $0.10 versus $0.09 in the prior year. This year, the market expects an improvement in earnings ($0.51 versus $0.10).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 59.5% when compared to the same quarter one year prior, rising from $11.50 million to $18.34 million.
  • Net operating cash flow has increased to $142.73 million or 19.61% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -11.39%.
  • The gross profit margin for LAMAR ADVERTISING CO is rather high; currently it is at 67.28%. 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 5.67% trails the industry average.

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