Barbarian At The Gate: Hartford Financial Services Group (HIG)

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 Hartford Financial Services Group ( HIG) 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 Hartford Financial Services Group as such a stock due to the following factors:

  • HIG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $87.2 million.
  • HIG has traded 2.0 million shares today.
  • HIG traded in a range 201.8% of the normal price range with a price range of $1.17.
  • HIG traded above its daily resistance level (quality: 530 days, meaning that the stock is crossing a resistance level set by the last 530 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 HIG:

The Hartford Financial Services Group, Inc., through its subsidiaries, provides insurance and financial services to individual and business customers primarily in the United States. The stock currently has a dividend yield of 1.7%. HIG has a PE ratio of 14. Currently there are 8 analysts that rate Hartford Financial Services Group a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Hartford Financial Services Group has been 2.5 million shares per day over the past 30 days. Hartford Financial Services Group has a market cap of $17.8 billion and is part of the financial sector and insurance industry. The stock has a beta of 1.26 and a short float of 1.5% with 3.17 days to cover. Shares are up 0.8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Hartford Financial Services Group as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • HIG's revenue growth has slightly outpaced the industry average of 9.5%. Since the same quarter one year prior, revenues slightly increased by 0.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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.
  • HARTFORD FINANCIAL SERVICES has improved earnings per share by 10.2% 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. We feel that this trend should continue. During the past fiscal year, HARTFORD FINANCIAL SERVICES increased its bottom line by earning $2.94 versus $2.50 in the prior year. This year, the market expects an improvement in earnings ($3.84 versus $2.94).
  • Net operating cash flow has increased to $447.00 million or 28.08% when compared to the same quarter last year. In addition, HARTFORD FINANCIAL SERVICES has also modestly surpassed the industry average cash flow growth rate of 21.66%.
  • Despite currently having a low debt-to-equity ratio of 0.31, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.

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