Trade-Ideas: Charter Communications (CHTR) Is Today's

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 Charter Communications ( CHTR) 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 Charter Communications as such a stock due to the following factors:

  • CHTR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $210.6 million.
  • CHTR has traded 604,614 shares today.
  • CHTR traded in a range 205.2% of the normal price range with a price range of $7.19.
  • CHTR traded above its daily resistance level (quality: 83 days, meaning that the stock is crossing a resistance level set by the last 83 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 CHTR:

Charter Communications, Inc., through its subsidiaries, provides entertainment, information, and communications solutions to residential and commercial customers in the United States. Currently there are 4 analysts that rate Charter Communications a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Charter Communications has been 1.7 million shares per day over the past 30 days. Charter has a market cap of $14.1 billion and is part of the services sector and media industry. The stock has a beta of 0.49 and a short float of 7.5% with 4.10 days to cover. Shares are down 4.9% year-to-date as of the close of trading on Friday.

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 Charter Communications as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.

Highlights from the ratings report include:
  • CHTR's revenue growth has slightly outpaced the industry average of 3.9%. Since the same quarter one year prior, revenues rose by 12.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 185.36% and other important driving factors, this stock has surged by 26.62% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • 35.06% is the gross profit margin for CHARTER COMMUNICATIONS INC which we consider to be strong. Regardless of CHTR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CHTR's net profit margin of 1.81% is significantly lower than the industry average.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Media industry and the overall market, CHARTER COMMUNICATIONS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The debt-to-equity ratio is very high at 93.91 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.17, which clearly demonstrates the inability to cover short-term cash needs.

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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