Trade-Ideas: Treehouse Foods (THS) 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 Treehouse Foods ( THS) 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 Treehouse Foods as such a stock due to the following factors:

  • THS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $57.1 million.
  • THS has traded 112,417 shares today.
  • THS traded in a range 214.3% of the normal price range with a price range of $3.87.
  • THS traded above its daily resistance level (quality: 54 days, meaning that the stock is crossing a resistance level set by the last 54 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in THS with the Ticky from Trade-Ideas. See the FREE profile for THS NOW at Trade-Ideas

More details on THS:

TreeHouse Foods, Inc. operates as a food and beverage manufacturer in the United States and Canada. It operates through North American Retail Grocery, Food Away From Home, and Industrial and Export segments. THS has a PE ratio of 34. Currently there are 7 analysts that rate Treehouse Foods a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Treehouse Foods has been 423,600 shares per day over the past 30 days. Treehouse has a market cap of $3.3 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.87 and a short float of 8.6% with 4.55 days to cover. Shares are down 13.3% year-to-date as of the close of trading on Monday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Treehouse Foods as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 11.2%. Since the same quarter one year prior, revenues rose by 26.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.79, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.01, which illustrates the ability to avoid short-term cash problems.
  • TREEHOUSE FOODS INC has improved earnings per share by 7.9% 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, TREEHOUSE FOODS INC reported lower earnings of $2.20 versus $2.34 in the prior year. This year, the market expects an improvement in earnings ($3.45 versus $2.20).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Food Products industry and the overall market, TREEHOUSE FOODS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The gross profit margin for TREEHOUSE FOODS INC is rather low; currently it is at 21.51%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.27% trails that of the industry average.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

More from Markets

Global Stocks Edge Higher, But Bond Yields, Oil Prices May Test Market Strength

Global Stocks Edge Higher, But Bond Yields, Oil Prices May Test Market Strength

Sohn Conference Briefly Distracts From Barrage of Earnings -- ICYMI

Sohn Conference Briefly Distracts From Barrage of Earnings -- ICYMI

Dow and Nasdaq Finish Lower as 10-Year Treasury Yield Hovers Near 3%

Dow and Nasdaq Finish Lower as 10-Year Treasury Yield Hovers Near 3%

Video: Stop Using Student Loan Money to Buy Bitcoin

Video: Stop Using Student Loan Money to Buy Bitcoin

Let the Najarian Brothers Crash-Proof Portfolio

Let the Najarian Brothers Crash-Proof Portfolio