Barbarian At The Gate: Coca-Cola (CCE)

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 Coca-Cola ( CCE) 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 Coca-Cola as such a stock due to the following factors:

  • CCE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $76.9 million.
  • CCE has traded 758,089 shares today.
  • CCE traded in a range 211% of the normal price range with a price range of $1.55.
  • CCE traded above its daily resistance level (quality: 529 days, meaning that the stock is crossing a resistance level set by the last 529 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 CCE:

Coca-Cola Enterprises, Inc. produces, distributes, and markets nonalcoholic beverages. It provides still and sparkling waters, flavored waters, juice and juice drinks, sports drinks, energy drinks, teas, and coffees. The stock currently has a dividend yield of 2.1%. CCE has a PE ratio of 17.0. Currently there are 3 analysts that rate Coca-Cola a buy, 1 analyst rates it a sell, and 9 rate it a hold.

The average volume for Coca-Cola has been 2.4 million shares per day over the past 30 days. Coca-Cola has a market cap of $11.7 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 1.05 and a short float of 0.9% with 1.70 days to cover. Shares are up 8.4% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Coca-Cola as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, solid stock price performance, impressive record of earnings per share growth and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • CCE's revenue growth has slightly outpaced the industry average of 4.4%. Since the same quarter one year prior, revenues slightly increased by 8.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • COCA-COLA ENTERPRISES INC has improved earnings per share by 18.2% in the most recent quarter compared to the same quarter a year ago. 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, COCA-COLA ENTERPRISES INC increased its bottom line by earning $2.45 versus $2.25 in the prior year. This year, the market expects an improvement in earnings ($2.92 versus $2.45).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Beverages industry average. The net income increased by 8.8% when compared to the same quarter one year prior, going from $182.00 million to $198.00 million.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Beverages industry and the overall market, COCA-COLA ENTERPRISES INC's return on equity significantly exceeds that of both the industry average and the S&P 500.

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