Barbarian At The Gate: Align Technology (ALGN)

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 Align Technology ( ALGN) 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 Align Technology as such a stock due to the following factors:

  • ALGN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $25.5 million.
  • ALGN has traded 757,555 shares today.
  • ALGN traded in a range 206% of the normal price range with a price range of $1.94.
  • ALGN traded above its daily resistance level (quality: 132 days, meaning that the stock is crossing a resistance level set by the last 132 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in ALGN with the Ticky from Trade-Ideas. See the FREE profile for ALGN NOW at Trade-Ideas

More details on ALGN:

Align Technology, Inc. ALGN has a PE ratio of 33. Currently there are 8 analysts that rate Align Technology a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Align Technology has been 858,900 shares per day over the past 30 days. Align Technology has a market cap of $4.8 billion and is part of the health care sector and health services industry. The stock has a beta of 1.50 and a short float of 7.3% with 15.29 days to cover. Shares are up 6.8% year-to-date as of the close of trading on Wednesday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Align Technology as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Health Care Equipment & Supplies industry average. The net income increased by 11.5% when compared to the same quarter one year prior, going from $32.44 million to $36.18 million.
  • ALGN's revenue growth trails the industry average of 22.7%. Since the same quarter one year prior, revenues slightly increased by 9.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ALGN has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.91, which clearly demonstrates the ability to cover short-term cash needs.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • The gross profit margin for ALIGN TECHNOLOGY INC is currently very high, coming in at 78.45%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 18.26% is above that of the industry average.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

More from Markets

Dow Rises Sharply as U.S.-China Trade Tensions Thaw

Dow Rises Sharply as U.S.-China Trade Tensions Thaw

To Win at Trade the U.S. Must Act and Behave Like China

To Win at Trade the U.S. Must Act and Behave Like China

Video: Jim Cramer on Tariffs, the Market Rally, Caterpillar and Micron

Video: Jim Cramer on Tariffs, the Market Rally, Caterpillar and Micron

Apple Shares Gain as U.S. and China Call Off Trade War, For Now

Apple Shares Gain as U.S. and China Call Off Trade War, For Now

GE Confirms $11.1 Billion Transportation Merger With Wabtec

GE Confirms $11.1 Billion Transportation Merger With Wabtec