Trade-Ideas: Informatica (INFA) Is Today's

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 Informatica ( INFA) 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 Informatica as such a stock due to the following factors:

  • INFA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $46.9 million.
  • INFA has traded 1.4 million shares today.
  • INFA traded in a range 211.8% of the normal price range with a price range of $1.38.
  • INFA traded above its daily resistance level (quality: 9 days, meaning that the stock is crossing a resistance level set by the last 9 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 INFA:

Informatica Corporation provides data integration software and services worldwide. INFA has a PE ratio of 36.8. Currently there are 9 analysts that rate Informatica a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for Informatica has been 1.4 million shares per day over the past 30 days. Informatica has a market cap of $3.5 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.75 and a short float of 1.3% with 1.29 days to cover. Shares are down 23% year-to-date as of the close of trading on Friday.

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 Informatica as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and compelling growth in net income. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:
  • INFA's revenue growth has slightly outpaced the industry average of 11.5%. Since the same quarter one year prior, revenues rose by 12.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • INFA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, INFA has a quick ratio of 2.01, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has increased to $39.34 million or 17.96% when compared to the same quarter last year. Despite an increase in cash flow, INFORMATICA CORP's cash flow growth rate is still lower than the industry average growth rate of 42.78%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Software industry and the overall market, INFORMATICA CORP's return on equity is below that of both the industry average and the S&P 500.
  • INFA has underperformed the S&P 500 Index, declining 19.02% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

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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