Watch Out: Barbarians At The Gate For Twenty-First Century Fox (FOXA)

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 Twenty-First Century Fox ( FOXA) 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 Twenty-First Century Fox as such a stock due to the following factors:

  • FOXA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $332.5 million.
  • FOXA has traded 246,147 shares today.
  • FOXA traded in a range 203.4% of the normal price range with a price range of $0.89.
  • FOXA 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 FOXA:

Twenty-First Century Fox, Inc. operates as a diversified media and entertainment company worldwide. It operates through Cable Network Programming, Television, Filmed Entertainment, and Direct Broadcast Satellite Television segments. The stock currently has a dividend yield of 0.7%. FOXA has a PE ratio of 21.4. Currently there are 13 analysts that rate Twenty-First Century Fox a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Twenty-First Century Fox has been 16.2 million shares per day over the past 30 days. Twenty-First Century Fox has a market cap of $49.6 billion and is part of the services sector and media industry. The stock has a beta of 1.25 and a short float of 4.3% with 7.66 days to cover. Shares are up 1.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Twenty-First Century Fox as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, good cash flow from operations, increase in stock price during the past year and growth in earnings per share. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • FOXA's revenue growth has slightly outpaced the industry average of 12.3%. Since the same quarter one year prior, revenues rose by 16.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 369.3% when compared to the same quarter one year prior, rising from -$371.00 million to $999.00 million.
  • Net operating cash flow has significantly increased by 212.91% to $1,346.00 million when compared to the same quarter last year. In addition, TWENTY-FIRST CENTURY FOX INC has also vastly surpassed the industry average cash flow growth rate of 14.05%.
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. 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.
  • TWENTY-FIRST CENTURY FOX INC's earnings per share improvement from the most recent quarter was slightly positive. 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, TWENTY-FIRST CENTURY FOX INC reported lower earnings of $1.66 versus $2.91 in the prior year. This year, the market expects an improvement in earnings ($3.47 versus $1.66).

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