Barbarian At The Gate: BlackBerry (BBRY)

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 BlackBerry ( BBRY) 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 BlackBerry as such a stock due to the following factors:

  • BBRY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $89.6 million.
  • BBRY has traded 7.9 million shares today.
  • BBRY traded in a range 283.1% of the normal price range with a price range of $0.81.
  • BBRY traded above its daily resistance level (quality: 72 days, meaning that the stock is crossing a resistance level set by the last 72 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 BBRY:

BlackBerry Limited provides wireless communications solutions worldwide. Currently there are 3 analysts that rate BlackBerry a buy, 4 analysts rate it a sell, and 12 rate it a hold.

The average volume for BlackBerry has been 9.2 million shares per day over the past 30 days. BlackBerry has a market cap of $5.4 billion and is part of the technology sector and telecommunications industry. Shares are down 6.6% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates BlackBerry as a sell. The area that we feel has been the company's primary weakness has been its declining revenues.

Highlights from the ratings report include:
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Computers & Peripherals industry and the overall market, BLACKBERRY LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for BLACKBERRY LTD is rather high; currently it is at 62.58%. Regardless of BBRY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BBRY's net profit margin of 4.24% is significantly lower than the industry average.
  • The revenue fell significantly faster than the industry average of 33.8%. Since the same quarter one year prior, revenues fell by 32.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.50, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.69 is very high and demonstrates very strong liquidity.
  • This stock has increased by 33.33% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in BBRY do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

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