Barbarian At The Gate: International Paper (IP)

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 International Paper ( IP) 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 International Paper as such a stock due to the following factors:

  • IP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $124.6 million.
  • IP has traded 963,020 shares today.
  • IP traded in a range 241.8% of the normal price range with a price range of $1.55.
  • IP traded above its daily resistance level (quality: 43 days, meaning that the stock is crossing a resistance level set by the last 43 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in IP with the Ticky from Trade-Ideas. See the FREE profile for IP NOW at Trade-Ideas

More details on IP:

International Paper Company operates as a paper and packaging company in North America, Europe, Latin America, Russia, Asia, and the Middle East. The stock currently has a dividend yield of 3.3%. IP has a PE ratio of 24.3. Currently there are 7 analysts that rate International Paper a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for International Paper has been 3.7 million shares per day over the past 30 days. International has a market cap of $20.7 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.45 and a short float of 2.5% with 4.34 days to cover. Shares are down 1.4% year-to-date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates International Paper as a buy. The company's strongest point has been its expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • INTL PAPER CO's earnings per share declined by 26.9% 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, INTL PAPER CO increased its bottom line by earning $3.01 versus $1.71 in the prior year. This year, the market expects an improvement in earnings ($3.55 versus $3.01).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 2.3%. Since the same quarter one year prior, revenues slightly dropped by 1.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • In its most recent trading session, IP has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
  • The gross profit margin for INTL PAPER CO is rather low; currently it is at 21.11%. Regardless of IP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.23% trails the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Paper & Forest Products industry and the overall market on the basis of return on equity, INTL PAPER CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

null

More from Markets

Stocks Extend Gains Amid Progress on U.S.-China Trade

Stocks Extend Gains Amid Progress on U.S.-China Trade

Micron Spikes After $10 Billion Buyback Plan Caps Bullish Q3 Earnings Forecast

Micron Spikes After $10 Billion Buyback Plan Caps Bullish Q3 Earnings Forecast

J.C. Penney Shares Fall as CEO Marvin Ellison Resigns to Head Lowe's

J.C. Penney Shares Fall as CEO Marvin Ellison Resigns to Head Lowe's

U.S. Crude Oil Hits Fresh 3-Year Highs as Gas Prices March to $3 a Gallon

U.S. Crude Oil Hits Fresh 3-Year Highs as Gas Prices March to $3 a Gallon

Oil Prices, China Tariffs, Micron and Kohl's - 5 Things You Must Know

Oil Prices, China Tariffs, Micron and Kohl's - 5 Things You Must Know