Barbarian At The Gate: Altera (ALTR)

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 Altera ( ALTR) 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 Altera as such a stock due to the following factors:

  • ALTR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $108.9 million.
  • ALTR has traded 407,057 shares today.
  • ALTR traded in a range 200.5% of the normal price range with a price range of $0.87.
  • ALTR traded above its daily resistance level (quality: 5 days, meaning that the stock is crossing a resistance level set by the last 5 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 ALTR:

Altera Corporation, a semiconductor company, designs, manufactures, and sells programmable logic devices (PLD), HardCopy application-specific integrated circuit (ASIC) devices, power system-on-chip devices (PowerSoCs), pre-defined design building blocks, and proprietary development software. The stock currently has a dividend yield of 2%. ALTR has a PE ratio of 24.6. Currently there are 12 analysts that rate Altera a buy, 2 analysts rate it a sell, and 4 rate it a hold.

The average volume for Altera has been 2.4 million shares per day over the past 30 days. Altera has a market cap of $11.0 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.20 and a short float of 1.4% with 1.77 days to cover. Shares are up 7.9% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Altera as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • ALTR's revenue growth has slightly outpaced the industry average of 10.3%. Since the same quarter one year prior, revenues rose by 16.5%. 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 greatly exceeded that of the S&P 500, but is less than that of the Semiconductors & Semiconductor Equipment industry average. The net income increased by 25.1% when compared to the same quarter one year prior, rising from $101.51 million to $127.00 million.
  • Net operating cash flow has significantly increased by 164.78% to $170.96 million when compared to the same quarter last year. In addition, ALTERA CORP has also vastly surpassed the industry average cash flow growth rate of 7.77%.
  • Despite currently having a low debt-to-equity ratio of 0.44, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 5.17 is very high and demonstrates very strong liquidity.
  • ALTERA CORP has improved earnings per share by 32.3% 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, ALTERA CORP reported lower earnings of $1.36 versus $1.71 in the prior year. This year, the market expects an improvement in earnings ($1.52 versus $1.36).

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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