Watch Out: Barbarians At The Gate For HomeAway (AWAY)

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 HomeAway ( AWAY) 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 HomeAway as such a stock due to the following factors:

  • AWAY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $30.5 million.
  • AWAY has traded 451,854 shares today.
  • AWAY traded in a range 223.2% of the normal price range with a price range of $1.89.
  • AWAY traded above its daily resistance level (quality: 48 days, meaning that the stock is crossing a resistance level set by the last 48 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 AWAY:

HomeAway, Inc., together with its subsidiaries, operates an online vacation rental property marketplace that enables property owners and managers to market properties for rental to vacation travelers. AWAY has a PE ratio of 193.5. Currently there are 8 analysts that rate HomeAway a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for HomeAway has been 1.2 million shares per day over the past 30 days. HomeAway has a market cap of $3.1 billion and is part of the technology sector and internet industry. The stock has a beta of 0.89 and a short float of 8% with 8.31 days to cover. Shares are down 19.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates HomeAway as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 7.3%. Since the same quarter one year prior, revenues rose by 31.9%. 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.
  • The gross profit margin for HOMEAWAY INC is currently very high, coming in at 85.79%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 3.38% is above that of the industry average.
  • Despite currently having a low debt-to-equity ratio of 0.33, 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 3.28 is very high and demonstrates very strong liquidity.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet & Catalog Retail industry. The net income has significantly decreased by 29.3% when compared to the same quarter one year ago, falling from $5.47 million to $3.87 million.
  • 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 Internet & Catalog Retail industry and the overall market, HOMEAWAY INC's return on equity significantly trails that of both the industry average and 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.

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