Leucadia National (LUK) 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 Leucadia National ( LUK) 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 Leucadia National as such a stock due to the following factors:

  • LUK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $29.2 million.
  • LUK has traded 1.1 million shares today.
  • LUK traded in a range 219.8% of the normal price range with a price range of $0.73.
  • LUK traded above its daily resistance level (quality: 239 days, meaning that the stock is crossing a resistance level set by the last 239 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 LUK:

Leucadia National Corporation, through its subsidiary, Jefferies Group LLC, primarily operates in the investment banking and capital markets sector. The stock currently has a dividend yield of 1%. LUK has a PE ratio of 19.

The average volume for Leucadia National has been 1.2 million shares per day over the past 30 days. Leucadia has a market cap of $8.9 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.52 and a short float of 1.8% with 4.76 days to cover. Shares are up 8.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Leucadia National as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, attractive valuation levels, impressive record of earnings per share growth and notable return on equity. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • LUK's revenue growth has slightly outpaced the industry average of 7.0%. Since the same quarter one year prior, revenues slightly increased by 7.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Financial Services industry. The net income increased by 300.5% when compared to the same quarter one year prior, rising from $95.33 million to $381.78 million.
  • LEUCADIA NATIONAL CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, LEUCADIA NATIONAL CORP reported lower earnings of $0.58 versus $1.38 in the prior year.
  • 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. When compared to other companies in the Diversified Financial Services industry and the overall market, LEUCADIA NATIONAL CORP's return on equity is below that of both the industry average and the S&P 500.

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