Trade-Ideas: IHS (IHS) Is Today's

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 IHS ( IHS) 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 IHS as such a stock due to the following factors:

  • IHS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $32.0 million.
  • IHS has traded 243,565 shares today.
  • IHS traded in a range 291.8% of the normal price range with a price range of $5.47.
  • IHS traded above its daily resistance level (quality: 216 days, meaning that the stock is crossing a resistance level set by the last 216 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 IHS:

IHS Inc. provides critical information, insights, and analytics worldwide. IHS has a PE ratio of 43. Currently there are 5 analysts that rate IHS a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for IHS has been 414,300 shares per day over the past 30 days. IHS has a market cap of $8.7 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.16 and a short float of 2.9% with 7.07 days to cover. Shares are up 12.9% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates IHS as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • IHS's revenue growth has slightly outpaced the industry average of 1.2%. Since the same quarter one year prior, revenues slightly increased by 4.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • IHS INC has improved earnings per share by 21.3% 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. We feel that this trend should continue. During the past fiscal year, IHS INC increased its bottom line by earning $2.83 versus $1.97 in the prior year. This year, the market expects an improvement in earnings ($5.85 versus $2.83).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Professional Services industry. The net income increased by 21.9% when compared to the same quarter one year prior, going from $32.42 million to $39.52 million.
  • The gross profit margin for IHS INC is rather high; currently it is at 60.56%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 7.23% is above that of the industry average.
  • Net operating cash flow has increased to $188.04 million or 22.21% when compared to the same quarter last year. In addition, IHS INC has also modestly surpassed the industry average cash flow growth rate of 19.21%.

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