Barbarian At The Gate: MasTec (MTZ)

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 MasTec ( MTZ) 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 MasTec as such a stock due to the following factors:

  • MTZ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.3 million.
  • MTZ has traded 485,953 shares today.
  • MTZ traded in a range 253.7% of the normal price range with a price range of $1.58.
  • MTZ traded above its daily resistance level (quality: 85 days, meaning that the stock is crossing a resistance level set by the last 85 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 MTZ:

MasTec, Inc., an infrastructure construction company, provides engineering, building, installation, maintenance, and upgrade services for energy, utility, and communications infrastructure primarily in the United States. MTZ has a PE ratio of 18.1. Currently there are 7 analysts that rate MasTec a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for MasTec has been 1.2 million shares per day over the past 30 days. MasTec has a market cap of $2.4 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.39 and a short float of 16.1% with 9.30 days to cover. Shares are down 8.4% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates MasTec as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 11.3%. Since the same quarter one year prior, revenues rose by 13.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 538.94% to $75.71 million when compared to the same quarter last year. In addition, MASTEC INC has also vastly surpassed the industry average cash flow growth rate of -17.32%.
  • MASTEC INC's earnings per share declined by 11.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, MASTEC INC increased its bottom line by earning $1.74 versus $1.43 in the prior year. For the next year, the market is expecting a contraction of 10.3% in earnings ($1.56 versus $1.74).
  • The change in net income from the same quarter one year ago has exceeded that of the Construction & Engineering industry average, but is less than that of the S&P 500. The net income has decreased by 8.3% when compared to the same quarter one year ago, dropping from $34.94 million to $32.05 million.

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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