Campbell Soup (CPB) 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 Campbell Soup ( CPB) 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 Campbell Soup as such a stock due to the following factors:

  • CPB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $68.3 million.
  • CPB has traded 754,207 shares today.
  • CPB traded in a range 215.5% of the normal price range with a price range of $1.06.
  • CPB traded above its daily resistance level (quality: 12 days, meaning that the stock is crossing a resistance level set by the last 12 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 CPB:

Campbell Soup Company, together with its subsidiaries, manufactures and markets convenience food products. It operates through U.S. Simple Meals; Global Baking and Snacking; International Simple Meals and Beverages; U.S. Beverages; and Bolthouse and Foodservice segments. The U.S. The stock currently has a dividend yield of 2.7%. CPB has a PE ratio of 2. Currently there is 1 analyst that rates Campbell Soup a buy, 3 analysts rate it a sell, and 8 rate it a hold.

The average volume for Campbell Soup has been 1.4 million shares per day over the past 30 days. Campbell has a market cap of $14.5 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.84 and a short float of 7.2% with 8.73 days to cover. Shares are up 6.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Campbell Soup as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, expanding profit margins and increase in stock price during the past year. 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 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 Food Products industry and the overall market, CAMPBELL SOUP CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 39.79% is the gross profit margin for CAMPBELL SOUP CO which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 9.57% is above that of the industry average.
  • CAMPBELL SOUP CO reported flat earnings per share in the most recent quarter. 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, CAMPBELL SOUP CO increased its bottom line by earning $2.32 versus $2.16 in the prior year. This year, the market expects an improvement in earnings ($2.38 versus $2.32).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 11.1%. Since the same quarter one year prior, revenues slightly dropped by 3.5%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and the Food Products industry average. The net income has decreased by 1.1% when compared to the same quarter one year ago, dropping from $184.00 million to $182.00 million.

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