Brookfield Asset Management (BAM) 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 Brookfield Asset Management ( BAM) 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 Brookfield Asset Management as such a stock due to the following factors:

  • BAM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $28.9 million.
  • BAM has traded 428,223 shares today.
  • BAM traded in a range 206.3% of the normal price range with a price range of $1.07.
  • BAM traded above its daily resistance level (quality: 6 days, meaning that the stock is crossing a resistance level set by the last 6 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 BAM:

Brookfield Asset Management Inc. is a publicly owned asset management holding company. Through its subsidiaries the firm invests in the property, power, and infrastructure sectors. The stock currently has a dividend yield of 1.3%. BAM has a PE ratio of 13. Currently there are 3 analysts that rate Brookfield Asset Management a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Brookfield Asset Management has been 1.3 million shares per day over the past 30 days. Brookfield Asset Management has a market cap of $34.3 billion and is part of the financial sector and real estate industry. Shares are up 7.4% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Brookfield Asset Management as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, reasonable valuation levels, notable return on equity and impressive record of earnings per share growth. 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:
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • BAM's revenue growth trails the industry average of 20.0%. Since the same quarter one year prior, revenues slightly increased by 0.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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. Compared to other companies in the Real Estate Management & Development industry and the overall market on the basis of return on equity, BROOKFIELD ASSET MANAGEMENT has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • BROOKFIELD ASSET MANAGEMENT has improved earnings per share by 36.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, BROOKFIELD ASSET MANAGEMENT increased its bottom line by earning $3.11 versus $2.09 in the prior year. For the next year, the market is expecting a contraction of 63.4% in earnings ($1.14 versus $3.11).

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