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 Iconix Brand Group ( ICON) 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 Iconix Brand Group as such a stock due to the following factors:

  • ICON has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $41.1 million.
  • ICON has traded 710,946 shares today.
  • ICON traded in a range 203.3% of the normal price range with a price range of $1.39.
  • ICON traded above its daily resistance level (quality: 12 days, meaning that the stock is crossing a resistance level set by the last 12 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 ICON:

Iconix Brand Group, Inc., a brand management company, is engaged in licensing, marketing, and providing trend direction for a portfolio of consumer and entertainment brands primarily in the United States and internationally. ICON has a PE ratio of 14.3. Currently there are 5 analysts that rate Iconix Brand Group a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Iconix Brand Group has been 656,400 shares per day over the past 30 days. Iconix Brand Group has a market cap of $1.8 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.44 and a short float of 24.9% with 10.05 days to cover. Shares are down 4.3% year-to-date as of the close of trading on Tuesday.

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 Iconix Brand Group as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, revenue growth, expanding profit margins, notable return on equity and compelling growth in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • ICONIX BRAND GROUP INC has improved earnings per share by 16.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ICONIX BRAND GROUP INC increased its bottom line by earning $2.11 versus $1.52 in the prior year. This year, the market expects an improvement in earnings ($2.75 versus $2.11).
  • ICON's revenue growth trails the industry average of 16.6%. Since the same quarter one year prior, revenues slightly increased by 6.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for ICONIX BRAND GROUP INC is currently very high, coming in at 100.00%. ICON has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, ICON's net profit margin of 29.69% significantly outperformed against the industry.
  • 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. Compared to other companies in the Textiles, Apparel & Luxury Goods industry and the overall market on the basis of return on equity, ICONIX BRAND GROUP INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Textiles, Apparel & Luxury Goods industry average. The net income increased by 16.5% when compared to the same quarter one year prior, going from $29.00 million to $33.78 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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