Watch Out: Barbarians At The Gate For Ingredion (INGR)

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 Ingredion ( INGR) 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 Ingredion as such a stock due to the following factors:

  • INGR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $35.0 million.
  • INGR has traded 341,798 shares today.
  • INGR traded in a range 204.7% of the normal price range with a price range of $1.99.
  • INGR traded above its daily resistance level (quality: 71 days, meaning that the stock is crossing a resistance level set by the last 71 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 INGR:

Ingredion Incorporated, together with its subsidiaries, manufactures and sells starch and sweetener ingredients to various industries. The stock currently has a dividend yield of 2.5%. INGR has a PE ratio of 13.2. Currently there are 2 analysts that rate Ingredion a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Ingredion has been 610,800 shares per day over the past 30 days. Ingredion has a market cap of $5.0 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 1.44 and a short float of 1.6% with 2.86 days to cover. Shares are down 1.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ingredion as a buy. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • INGR's debt-to-equity ratio of 0.75 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that INGR's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.71 is high and demonstrates strong liquidity.
  • Net operating cash flow has significantly increased by 52.07% to $257.00 million when compared to the same quarter last year. Despite an increase in cash flow, INGREDION INC's average is still marginally south of the industry average growth rate of 52.64%.
  • INGREDION INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, INGREDION INC reported lower earnings of $5.06 versus $5.48 in the prior year. This year, the market expects an improvement in earnings ($5.53 versus $5.06).
  • INGR, with its decline in revenue, underperformed when compared the industry average of 3.0%. Since the same quarter one year prior, revenues slightly dropped by 8.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

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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