Trade-Ideas LLC identified Canadian Pacific Railway ( CP) 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 Canadian Pacific Railway as such a stock due to the following factors:

  • CP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $135.4 million.
  • CP has traded 1.2 million shares today.
  • CP traded in a range 249.4% of the normal price range with a price range of $11.59.
  • CP traded above its daily resistance level (quality: 9 days, meaning that the stock is crossing a resistance level set by the last 9 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 CP:

Canadian Pacific Railway Limited, through its subsidiaries, operates a transcontinental railway in Canada and the United States. The company provides logistics and supply chain expertise services. The stock currently has a dividend yield of 0.8%. CP has a PE ratio of 2. Currently there are 13 analysts that rate Canadian Pacific Railway a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Canadian Pacific Railway has been 1.1 million shares per day over the past 30 days. Canadian Pacific Railway has a market cap of $20.8 billion and is part of the services sector and transportation industry. Shares are down 30.3% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Canadian Pacific Railway as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • CP's revenue growth has slightly outpaced the industry average of 7.3%. Since the same quarter one year prior, revenues slightly increased by 2.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Road & Rail industry and the overall market, CANADIAN PACIFIC RAILWAY LTD's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $696.00 million or 30.33% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -3.71%.
  • 48.80% is the gross profit margin for CANADIAN PACIFIC RAILWAY LTD which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 18.89% trails the industry average.
  • CANADIAN PACIFIC RAILWAY LTD's earnings per share declined by 11.7% 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, CANADIAN PACIFIC RAILWAY LTD increased its bottom line by earning $8.49 versus $4.98 in the prior year. This year, the market expects an improvement in earnings ($10.27 versus $8.49).

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