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 BJ's Restaurants ( BJRI) 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 BJ's Restaurants as such a stock due to the following factors:

  • BJRI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $26.4 million.
  • BJRI has traded 1.3 million shares today.
  • BJRI traded in a range 207% of the normal price range with a price range of $2.19.
  • BJRI traded above its daily resistance level (quality: 168 days, meaning that the stock is crossing a resistance level set by the last 168 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 BJRI:

BJ's Restaurants, Inc. owns and operates casual dining restaurants in the Unites States. The company's restaurants offer pizzas, beers, appetizers, entrees, pastas, sandwiches, salads, and desserts. BJRI has a PE ratio of 38.2. Currently there are 3 analysts that rate BJ's Restaurants a buy, 2 analysts rate it a sell, and 11 rate it a hold.

The average volume for BJ's Restaurants has been 587,000 shares per day over the past 30 days. BJ's has a market cap of $791.1 million and is part of the services sector and leisure industry. The stock has a beta of 1.04 and a short float of 20.1% with 4.99 days to cover. Shares are down 10.2% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates BJ's Restaurants as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.4%. Since the same quarter one year prior, revenues slightly increased by 8.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The share price of BJ'S RESTAURANTS INC has not done very well: it is down 13.93% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, BJ'S RESTAURANTS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The gross profit margin for BJ'S RESTAURANTS INC is rather low; currently it is at 15.12%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.25% significantly trails the industry average.

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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