Watch Out: Barbarians At The Gate For L-3 Communications Holdings (LLL)

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 L-3 Communications Holdings ( LLL) 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 L-3 Communications Holdings as such a stock due to the following factors:

  • LLL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $92.8 million.
  • LLL has traded 3.8 million shares today.
  • LLL traded in a range 268.5% of the normal price range with a price range of $4.73.
  • LLL traded above its daily resistance level (quality: 531 days, meaning that the stock is crossing a resistance level set by the last 531 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in LLL with the Ticky from Trade-Ideas. See the FREE profile for LLL NOW at Trade-Ideas

More details on LLL:

L-3 Communications Holdings, Inc. provides command, control, communications, intelligence, surveillance, and reconnaissance (C3ISR) systems; aircraft modernization and maintenance; and government services in the United States and internationally. The stock currently has a dividend yield of 2.1%. LLL has a PE ratio of 13.6. Currently there are 4 analysts that rate L-3 Communications Holdings a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for L-3 Communications Holdings has been 840,900 shares per day over the past 30 days. L-3 has a market cap of $9.9 billion and is part of the industrial goods sector and aerospace/defense industry. The stock has a beta of 0.97 and a short float of 3.5% with 3.95 days to cover. Shares are up 8.4% year-to-date as of the close of trading on Monday.

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 L-3 Communications Holdings as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, LLL's share price has jumped by 36.09%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, LLL should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The current debt-to-equity ratio, 0.60, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.23, which illustrates the ability to avoid short-term cash problems.
  • LLL, with its decline in revenue, slightly underperformed the industry average of 3.2%. Since the same quarter one year prior, revenues slightly dropped by 6.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • L-3 COMMUNICATIONS HLDGS INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, L-3 COMMUNICATIONS HLDGS INC increased its bottom line by earning $8.54 versus $8.03 in the prior year. For the next year, the market is expecting a contraction of 1.6% in earnings ($8.40 versus $8.54).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

null

More from Markets

Dow Tumbles, Stocks Slide on Renewed Trade War Concerns

Dow Tumbles, Stocks Slide on Renewed Trade War Concerns

Emerging Markets Get Pounded by Global Trade Concerns

Emerging Markets Get Pounded by Global Trade Concerns

PTC Shares Skyrocket on Positive Data for Spinal Muscular Atrophy Drug

PTC Shares Skyrocket on Positive Data for Spinal Muscular Atrophy Drug

Tesla Slumps After Mary McCormack Tweets Husband's Flaming Model S

Tesla Slumps After Mary McCormack Tweets Husband's Flaming Model S

Stocks Dive Globally as U.S.-China Trade War Intensifies

Stocks Dive Globally as U.S.-China Trade War Intensifies