Amdocs (DOX) Marked As A Barbarian At The Gate

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 Amdocs ( DOX) 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 Amdocs as such a stock due to the following factors:

  • DOX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $28.7 million.
  • DOX has traded 560,298 shares today.
  • DOX traded in a range 250.5% of the normal price range with a price range of $1.67.
  • DOX traded above its daily resistance level (quality: 55 days, meaning that the stock is crossing a resistance level set by the last 55 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 DOX:

Amdocs Limited, together with its subsidiaries, provides software and services for communications, media, and entertainment industry service providers worldwide. The stock currently has a dividend yield of 1.3%. DOX has a PE ratio of 18.7. Currently there are 4 analysts that rate Amdocs a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Amdocs has been 519,400 shares per day over the past 30 days. Amdocs has a market cap of $7.5 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.80 and a short float of 0.3% with 0.82 days to cover. Shares are up 14.4% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Amdocs as a buy. 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, reasonable valuation levels, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 7.6%. Since the same quarter one year prior, revenues slightly increased by 7.3%. 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.
  • DOX's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, DOX has a quick ratio of 1.92, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has increased to $198.81 million or 14.71% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -4.08%.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. 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.

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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