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 SolarCity ( SCTY) 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 SolarCity as such a stock due to the following factors:
- SCTY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $258.6 million.
- SCTY has traded 4.0 million shares today.
- SCTY traded in a range 213.8% of the normal price range with a price range of $6.03.
- SCTY traded above its daily resistance level (quality: 54 days, meaning that the stock is crossing a resistance level set by the last 54 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 SCTY with the Ticky from Trade-Ideas. See the FREE profile for SCTY NOW at Trade-Ideas More details on SCTY: SolarCity Corporation designs, installs, and sells or leases solar energy systems to residential and commercial customers, and government entities in the United States. Currently there are 6 analysts that rate SolarCity a buy, no analysts rate it a sell, and none rate it a hold. The average volume for SolarCity has been 5.0 million shares per day over the past 30 days. SolarCity has a market cap of $4.8 billion and is part of the technology sector and electronics industry. Shares are down 3.4% 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 SolarCity as a sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins, weak operating cash flow, generally high debt management risk and feeble growth in its earnings per share. Highlights from the ratings report include:
- The gross profit margin for SOLARCITY CORP is rather low; currently it is at 23.27%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -37.86% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$23.31 million or 361.94% 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 debt-to-equity ratio of 1.15 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, SCTY has managed to keep a strong quick ratio of 1.75, which demonstrates the ability to cover short-term cash needs.
- SOLARCITY CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. 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, SOLARCITY CORP reported poor results of -$0.79 versus -$0.56 in the prior year. For the next year, the market is expecting a contraction of 398.7% in earnings (-$3.94 versus -$0.79).
- Compared to other companies in the Electrical Equipment industry and the overall market, SOLARCITY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full SolarCity 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.