Barbarian At The Gate: United Therapeutics (UTHR)

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 United Therapeutics ( UTHR) 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 United Therapeutics as such a stock due to the following factors:

  • UTHR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $44.7 million.
  • UTHR has traded 132,405 shares today.
  • UTHR traded in a range 313.8% of the normal price range with a price range of $6.02.
  • UTHR traded above its daily resistance level (quality: 29 days, meaning that the stock is crossing a resistance level set by the last 29 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 UTHR:

United Therapeutics Corporation, a biotechnology company, develops and commercializes products to address the unmet medical needs of patients with chronic and life-threatening conditions worldwide. UTHR has a PE ratio of 18.2. Currently there are 4 analysts that rate United Therapeutics a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for United Therapeutics has been 658,700 shares per day over the past 30 days. United has a market cap of $4.4 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.70 and a short float of 16.5% with 10.51 days to cover. Shares are down 18.9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates United Therapeutics as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, robust revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and growth in earnings per share. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 38.15% and other important driving factors, this stock has surged by 30.35% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, UTHR should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • UTHR's revenue growth trails the industry average of 43.4%. Since the same quarter one year prior, revenues rose by 15.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • UTHR's debt-to-equity ratio is very low at 0.30 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.18, which illustrates the ability to avoid short-term cash problems.
  • UNITED THERAPEUTICS CORP has improved earnings per share by 38.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, UNITED THERAPEUTICS CORP reported lower earnings of $3.28 versus $5.69 in the prior year. This year, the market expects an improvement in earnings ($8.42 versus $3.28).

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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