Watch Out: Barbarians At The Gate For Cemex SAB De CV (CX)

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 Cemex SAB de CV ( CX) 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 Cemex SAB de CV as such a stock due to the following factors:

  • CX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $117.7 million.
  • CX has traded 6.9 million shares today.
  • CX traded in a range 319.1% of the normal price range with a price range of $0.68.
  • CX traded above its daily resistance level (quality: 1 day, meaning that the stock is crossing a resistance level set by the last 1 calendar day. 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 CX:

CEMEX, S.A.B. de C.V. produces, markets, distributes, and sells cement, ready-mix concrete, clinker, aggregates, and other construction materials for home construction and concrete pavement applications. Currently there are 8 analysts that rate Cemex SAB de CV a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Cemex SAB de CV has been 9.4 million shares per day over the past 30 days. Cemex SAB de CV has a market cap of $15.7 billion and is part of the industrial goods sector and materials & construction industry. Shares are up 9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cemex SAB de CV as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and growth in earnings per share. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from the ratings report include:
  • CX's revenue growth has slightly outpaced the industry average of 5.7%. Since the same quarter one year prior, revenues slightly increased by 7.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 32.28% over the past year, a rise that has exceeded that of the S&P 500 Index. 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.
  • CEMEX SAB DE CV reported flat earnings per share in the most recent quarter. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, CEMEX SAB DE CV continued to lose money by earning -$0.66 versus -$0.76 in the prior year. This year, the market expects an improvement in earnings (-$0.17 versus -$0.66).
  • 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 Construction Materials industry and the overall market, CEMEX SAB DE CV's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CEMEX SAB DE CV is currently lower than what is desirable, coming in at 27.45%. Regardless of CX's low profit margin, it has managed to increase from the same period last year.

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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