Computer (CSC) 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 Computer ( CSC) 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 Computer as such a stock due to the following factors:

  • CSC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $55.1 million.
  • CSC has traded 651,285 shares today.
  • CSC traded in a range 205.3% of the normal price range with a price range of $2.05.
  • CSC traded above its daily resistance level (quality: 529 days, meaning that the stock is crossing a resistance level set by the last 529 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 CSC:

Computer Sciences Corporation provides information technology (IT) and professional services and solutions in North America, Europe, Asia, and Australia. The company operates through Global Business Services, Global Infrastructure Services, and North American Public Sector segments. The stock currently has a dividend yield of 1.4%. CSC has a PE ratio of 15.2. Currently there are 2 analysts that rate Computer a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Computer has been 1.3 million shares per day over the past 30 days. Computer has a market cap of $8.9 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.50 and a short float of 5.9% with 9.05 days to cover. Shares are up 13.7% year-to-date as of the close of trading on Monday.

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 Computer as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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.
  • COMPUTER SCIENCES CORP has improved earnings per share by 16.8% 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, COMPUTER SCIENCES CORP increased its bottom line by earning $4.21 versus $3.07 in the prior year. This year, the market expects an improvement in earnings ($4.63 versus $4.21).
  • The debt-to-equity ratio is somewhat low, currently at 0.75, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, CSC has a quick ratio of 1.52, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 6.6%. Since the same quarter one year prior, revenues slightly dropped by 3.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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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