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 Discovery Communications ( DISCK) 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 Discovery Communications as such a stock due to the following factors:
- DISCK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $66.8 million.
- DISCK has traded 485,228 shares today.
- DISCK traded in a range 235.3% of the normal price range with a price range of $3.57.
- DISCK traded above its daily resistance level (quality: 27 days, meaning that the stock is crossing a resistance level set by the last 27 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 DISCK with the Ticky from Trade-Ideas. See the FREE profile for DISCK NOW at Trade-Ideas More details on DISCK: Discovery Communications, Inc. operates as a media company worldwide. The company operates in three segments: U.S. Networks, International Networks, and Education. DISCK has a PE ratio of 24.9. Currently there are no analysts that rate Discovery Communications a buy, no analysts rate it a sell, and 1 rates it a hold. The average volume for Discovery Communications has been 621,900 shares per day over the past 30 days. Discovery has a market cap of $5.2 billion and is part of the services sector and media industry. The stock has a beta of 1.16 and a short float of 2.1% with 1.33 days to cover. Shares are down 18.3% year-to-date as of the close of trading on Tuesday. 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 Discovery Communications as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- DISCK's revenue growth has slightly outpaced the industry average of 14.9%. Since the same quarter one year prior, revenues rose by 22.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Media industry and the overall market, DISCOVERY COMMUNICATIONS INC's return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for DISCOVERY COMMUNICATIONS INC is currently very high, coming in at 90.64%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 16.30% is above that of the industry average.
- Net operating cash flow has significantly increased by 83.96% to $241.00 million when compared to the same quarter last year. In addition, DISCOVERY COMMUNICATIONS INC has also vastly surpassed the industry average cash flow growth rate of 5.70%.
- DISCOVERY COMMUNICATIONS INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DISCOVERY COMMUNICATIONS INC increased its bottom line by earning $2.97 versus $2.52 in the prior year. This year, the market expects an improvement in earnings ($11.02 versus $2.97).
- You can view the full Discovery Communications Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.