Barbarian At The Gate: MRC Global (MRC)

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 MRC Global ( MRC) 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 MRC Global as such a stock due to the following factors:

  • MRC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $28.9 million.
  • MRC has traded 121,725 shares today.
  • MRC traded in a range 336.2% of the normal price range with a price range of $1.77.
  • MRC traded above its daily resistance level (quality: 146 days, meaning that the stock is crossing a resistance level set by the last 146 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 MRC:

MRC Global Inc., through its subsidiaries, distributes pipes, valves, fittings, and related products and services to the energy and industrial sectors in the Unites States, Canada, and internationally. MRC has a PE ratio of 10.3. Currently there are 4 analysts that rate MRC Global a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for MRC Global has been 2.6 million shares per day over the past 30 days. MRC Global has a market cap of $1.5 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.33 and a short float of 10.5% with 6.55 days to cover. Shares are down 5.2% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates MRC Global as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • MRC's revenue growth has slightly outpaced the industry average of 5.5%. Since the same quarter one year prior, revenues rose by 12.5%. 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 MRC GLOBAL INC is rather low; currently it is at 17.76%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.06% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$37.74 million or 145.90% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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