ITT (ITT) 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.

Trade-Ideas LLC identified ITT ( ITT) 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 ITT as such a stock due to the following factors:

  • ITT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $26.4 million.
  • ITT has traded 366,423 shares today.
  • ITT traded in a range 209.4% of the normal price range with a price range of $1.67.
  • ITT traded above its daily resistance level (quality: 3 days, meaning that the stock is crossing a resistance level set by the last 3 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 ITT:

ITT Corporation manufactures and sells engineered critical components and customized technology solutions for the energy, transportation, and industrial markets worldwide. The stock currently has a dividend yield of 1.2%. ITT has a PE ratio of 19.8. Currently there are 6 analysts that rate ITT a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for ITT has been 666,400 shares per day over the past 30 days. ITT has a market cap of $3.6 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.36 and a short float of 1% with 1.45 days to cover. Shares are down 0.6% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates ITT 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, increase in net income, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 9.6%. Since the same quarter one year prior, revenues slightly increased by 2.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ITT's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.41, which illustrates the ability to avoid short-term cash problems.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 200.9% when compared to the same quarter one year prior, rising from $11.20 million to $33.70 million.
  • 36.35% is the gross profit margin for ITT CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 5.10% trails the industry average.
  • ITT CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ITT CORP reported lower earnings of $2.03 versus $5.30 in the prior year. This year, the market expects an improvement in earnings ($2.58 versus $2.03).

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