Time Warner Cable (TWC) Marked As A Barbarian At The Gate

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 Time Warner Cable ( TWC) 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 Time Warner Cable as such a stock due to the following factors:

  • TWC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $192.9 million.
  • TWC has traded 1.3 million shares today.
  • TWC traded in a range 203.4% of the normal price range with a price range of $2.96.
  • TWC traded above its daily resistance level (quality: 36 days, meaning that the stock is crossing a resistance level set by the last 36 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 TWC:

Time Warner Cable Inc., together with its subsidiaries, offers video, high-speed data, and voice services in the United States. The stock currently has a dividend yield of 2%. TWC has a PE ratio of 20.5. Currently there are 7 analysts that rate Time Warner Cable a buy, no analysts rate it a sell, and 9 rate it a hold.

The average volume for Time Warner Cable has been 1.5 million shares per day over the past 30 days. Time Warner Cable has a market cap of $41.2 billion and is part of the services sector and media industry. The stock has a beta of 0.65 and a short float of 1.5% with 3.30 days to cover. Shares are up 8.8% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Time Warner Cable as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, reasonable valuation levels, good cash flow from operations and growth in earnings per share. 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:
  • 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 36.20% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, TWC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.4%. Since the same quarter one year prior, revenues slightly increased by 3.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has slightly increased to $1,695.00 million or 9.28% when compared to the same quarter last year. Despite an increase in cash flow, TIME WARNER CABLE INC's average is still marginally south of the industry average growth rate of 14.05%.
  • TIME WARNER CABLE INC has improved earnings per share by 7.3% 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, TIME WARNER CABLE INC reported lower earnings of $6.71 versus $6.91 in the prior year. This year, the market expects an improvement in earnings ($7.73 versus $6.71).

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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