Watch Out: Barbarians At The Gate For Ryland Group (RYL)

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 Ryland Group ( RYL) 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 Ryland Group as such a stock due to the following factors:

  • RYL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.6 million.
  • RYL has traded 194,347 shares today.
  • RYL traded in a range 276.5% of the normal price range with a price range of $2.23.
  • RYL traded above its daily resistance level (quality: 52 days, meaning that the stock is crossing a resistance level set by the last 52 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 RYL:

The Ryland Group, Inc. operates as a homebuilder and a mortgage-finance company in the United States. It engages in building single-family detached homes and attached homes, such as townhomes and condominiums. The stock currently has a dividend yield of 0.3%. RYL has a PE ratio of 13. Currently there are 6 analysts that rate Ryland Group a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Ryland Group has been 789,200 shares per day over the past 30 days. Ryland Group has a market cap of $2.0 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.90 and a short float of 16.2% with 12.86 days to cover. Shares are up 9.7% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ryland Group 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, growth in earnings per share and increase in net income. 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 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. 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.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.6%. Since the same quarter one year prior, revenues slightly increased by 5.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • RYLAND GROUP INC has improved earnings per share by 11.9% 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, RYLAND GROUP INC reported lower earnings of $3.10 versus $6.81 in the prior year. This year, the market expects an improvement in earnings ($3.54 versus $3.10).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Household Durables industry average, but is greater than that of the S&P 500. The net income increased by 12.4% when compared to the same quarter one year prior, going from $23.53 million to $26.46 million.

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Watch Out: Barbarians At The Gate For Ryland Group (RYL)

Watch Out: Barbarians At The Gate For Ryland Group (RYL)