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 Lions Gate Entertainment ( LGF) 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 Lions Gate Entertainment as such a stock due to the following factors:

  • LGF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $43.2 million.
  • LGF has traded 894,838 shares today.
  • LGF traded in a range 212.4% of the normal price range with a price range of $1.42.
  • LGF traded above its daily resistance level (quality: 76 days, meaning that the stock is crossing a resistance level set by the last 76 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 LGF:

Lions Gate Entertainment Corp. engages in motion picture production and distribution, television programming and syndication, home entertainment, family entertainment, digital distribution, channel platforms, and international distribution and sales activities. The stock currently has a dividend yield of 0.8%. LGF has a PE ratio of 27. Currently there are 11 analysts that rate Lions Gate Entertainment a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Lions Gate Entertainment has been 1.3 million shares per day over the past 30 days. Lions Gate Entertainment has a market cap of $4.9 billion and is part of the services sector and media industry. The stock has a beta of 0.96 and a short float of 19.3% with 12.30 days to cover. Shares are up 3.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Lions Gate Entertainment as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, good cash flow from operations, solid stock price performance, growth in earnings per share and expanding profit margins. 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:
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Media industry average. The net income increased by 10.6% when compared to the same quarter one year prior, going from $88.76 million to $98.19 million.
  • Net operating cash flow has increased to $44.90 million or 27.31% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 15.23%.
  • 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. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • LIONS GATE ENTERTAINMENT CP has improved earnings per share by 10.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LIONS GATE ENTERTAINMENT CP reported lower earnings of $1.02 versus $1.57 in the prior year. This year, the market expects an improvement in earnings ($1.63 versus $1.02).
  • 46.68% is the gross profit margin for LIONS GATE ENTERTAINMENT CP which we consider to be strong. Regardless of LGF's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LGF's net profit margin of 13.06% compares favorably to the industry average.

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