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.

Trade-Ideas LLC identified MSC Industrial Direct ( MSM) 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 MSC Industrial Direct as such a stock due to the following factors:

  • MSM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $37.1 million.
  • MSM has traded 415,896 shares today.
  • MSM traded in a range 204.5% of the normal price range with a price range of $2.03.
  • MSM 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 MSM:

MSC Industrial Direct Co., Inc., together with its subsidiaries, markets and distributes various ranges of metalworking and maintenance, repair, and operations (MRO) products primarily in the United States. The stock currently has a dividend yield of 2.2%. MSM has a PE ratio of 19.3. Currently there are 5 analysts that rate MSC Industrial Direct a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for MSC Industrial Direct has been 487,000 shares per day over the past 30 days. MSC Industrial Direct has a market cap of $3.5 billion and is part of the services sector and wholesale industry. The stock has a beta of 0.47 and a short float of 11.3% with 10.65 days to cover. Shares are down 12.6% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates MSC Industrial Direct 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, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.5%. Since the same quarter one year prior, revenues slightly increased by 7.7%. 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.
  • MSC INDUSTRIAL DIRECT' earnings per share from the most recent quarter came in slightly below the year earlier quarter. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, MSC INDUSTRIAL DIRECT increased its bottom line by earning $3.76 versus $3.75 in the prior year. This year, the market expects an improvement in earnings ($4.05 versus $3.76).
  • The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.86 is somewhat weak and could be cause for future problems.
  • 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 Trading Companies & Distributors industry and the overall market on the basis of return on equity, MSC INDUSTRIAL DIRECT has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • 47.49% is the gross profit margin for MSC INDUSTRIAL DIRECT which we consider to be strong. Regardless of MSM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MSM's net profit margin of 7.85% compares favorably to the industry average.

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