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 Archer-Daniels Midland ( ADM) 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 Archer-Daniels Midland as such a stock due to the following factors:

  • ADM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $163.9 million.
  • ADM has traded 513,090 shares today.
  • ADM traded in a range 245.1% of the normal price range with a price range of $1.74.
  • ADM traded above its daily resistance level (quality: 34 days, meaning that the stock is crossing a resistance level set by the last 34 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 ADM:

Archer-Daniels-Midland Company procures, transports, stores, processes, and merchandises agricultural commodities and products. The company's Oilseeds Processing segment originates, merchandises, crushes, and processes soybeans and soft seeds into vegetable oils and protein meals. The stock currently has a dividend yield of 2.4%. ADM has a PE ratio of 12. Currently there are 4 analysts that rate Archer-Daniels Midland a buy, 2 analysts rate it a sell, and 4 rate it a hold.

The average volume for Archer-Daniels Midland has been 3.4 million shares per day over the past 30 days. Archer-Daniels Midland has a market cap of $29.4 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 1.23 and a short float of 1.6% with 2.94 days to cover. Shares are down 8.3% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Archer-Daniels Midland as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, reasonable valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food Products industry. The net income increased by 84.6% when compared to the same quarter one year prior, rising from $267.00 million to $493.00 million.
  • Net operating cash flow has significantly increased by 116.42% to $46.00 million when compared to the same quarter last year. In addition, ARCHER-DANIELS-MIDLAND CO has also vastly surpassed the industry average cash flow growth rate of -37.89%.
  • The current debt-to-equity ratio, 0.34, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.71 is somewhat weak and could be cause for future problems.
  • After a year of stock price fluctuations, the net result is that ADM's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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.

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