Watch Out: Barbarians At The Gate For Whitewave Foods Company (WWAV)

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 Whitewave Foods Company ( WWAV) 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 Whitewave Foods Company as such a stock due to the following factors:

  • WWAV has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $29.9 million.
  • WWAV has traded 106,409 shares today.
  • WWAV traded in a range 236.8% of the normal price range with a price range of $1.56.
  • WWAV traded above its daily resistance level (quality: 44 days, meaning that the stock is crossing a resistance level set by the last 44 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 WWAV:

The WhiteWave Foods Company, a consumer packaged food and beverage company, manufactures, markets, distributes, and sells branded plant-based foods and beverages, coffee creamers and beverages, dairy, and organic greens and produce products in North America and Europe. WWAV has a PE ratio of 48.6. Currently there are 8 analysts that rate Whitewave Foods Company a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Whitewave Foods Company has been 1.6 million shares per day over the past 30 days. Whitewave has a market cap of $4.8 billion and is part of the consumer goods sector and food & beverage industry. Shares are up 18.4% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Whitewave Foods Company as a hold. 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 and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and weak operating cash flow.

Highlights from the ratings report include:
  • WWAV's revenue growth has slightly outpaced the industry average of 2.3%. Since the same quarter one year prior, revenues rose by 11.0%. 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 debt-to-equity ratio is somewhat low, currently at 0.69, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that WWAV's debt-to-equity ratio is low, the quick ratio, which is currently 0.64, displays a potential problem in covering short-term cash needs.
  • Net operating cash flow has decreased to $69.62 million or 20.91% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Food Products industry. The net income has significantly decreased by 34.2% when compared to the same quarter one year ago, falling from $29.71 million to $19.54 million.

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