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 Eagle Materials ( EXP) 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 Eagle Materials as such a stock due to the following factors:

  • EXP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $60.1 million.
  • EXP has traded 98,747 shares today.
  • EXP traded in a range 243.5% of the normal price range with a price range of $5.36.
  • EXP traded above its daily resistance level (quality: 3 days, meaning that the stock is crossing a resistance level set by the last 3 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 EXP:

Eagle Materials Inc. produces and sells construction products and building materials used in residential, industrial, commercial, and infrastructure construction; and products used in oil and natural gas extraction in the United States. The stock currently has a dividend yield of 0.5%. EXP has a PE ratio of 21. Currently there are 3 analysts that rate Eagle Materials a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Eagle Materials has been 680,600 shares per day over the past 30 days. Eagle has a market cap of $3.9 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.36 and a short float of 3.1% with 1.91 days to cover. Shares are down 0.9% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Eagle Materials as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, notable return on equity, 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 lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 21.2%. Since the same quarter one year prior, revenues rose by 17.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • EAGLE MATERIALS INC reported significant earnings per share improvement 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, EAGLE MATERIALS INC increased its bottom line by earning $3.71 versus $2.48 in the prior year. This year, the market expects an improvement in earnings ($4.26 versus $3.71).
  • 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. In comparison to the other companies in the Construction Materials industry and the overall market, EAGLE MATERIALS INC's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • Net operating cash flow has significantly increased by 91.49% to $50.98 million when compared to the same quarter last year. Despite an increase in cash flow of 91.49%, EAGLE MATERIALS INC is still growing at a significantly lower rate than the industry average of 145.61%.
  • The current debt-to-equity ratio, 0.51, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that EXP's debt-to-equity ratio is low, the quick ratio, which is currently 0.66, displays a potential problem in covering short-term cash needs.

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