Barbarian At The Gate: Trina Solar (TSL)

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 Trina Solar ( TSL) 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 Trina Solar as such a stock due to the following factors:

  • TSL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $31.5 million.
  • TSL has traded 1.6 million shares today.
  • TSL traded in a range 204.1% of the normal price range with a price range of $0.95.
  • TSL traded above its daily resistance level (quality: 21 days, meaning that the stock is crossing a resistance level set by the last 21 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 TSL:

Trina Solar Limited operates as an integrated solar-power products manufacturer and solar system developer in the People's Republic of China, Europe, the United States, and other Asia Pacific regions. TSL has a PE ratio of 43. Currently there are 5 analysts that rate Trina Solar a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Trina Solar has been 2.5 million shares per day over the past 30 days. Trina Solar has a market cap of $1.0 billion and is part of the technology sector and electronics industry. Shares are up 19.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Trina Solar as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and generally higher debt management risk.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 0.0%. Since the same quarter one year prior, revenues rose by 34.1%. 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.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Semiconductors & Semiconductor Equipment industry average. The net income has significantly decreased by 31.4% when compared to the same quarter one year ago, falling from $15.46 million to $10.62 million.
  • The gross profit margin for TRINA SOLAR LTD is rather low; currently it is at 15.75%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.50% significantly trails the industry average.

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