Trade-Ideas LLC identified Valspar ( VAL) 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 Valspar as such a stock due to the following factors:

  • VAL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $45.6 million.
  • VAL has traded 122,861 shares today.
  • VAL traded in a range 282.8% of the normal price range with a price range of $4.20.
  • VAL traded above its daily resistance level (quality: 151 days, meaning that the stock is crossing a resistance level set by the last 151 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 VAL:

The Valspar Corporation develops, manufactures, and distributes a range of coatings, paints, and related products worldwide. It operates in two segments, Coatings and Paints. The stock currently has a dividend yield of 1.4%. VAL has a PE ratio of 17. Currently there are 6 analysts that rate Valspar a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Valspar has been 561,100 shares per day over the past 30 days. Valspar has a market cap of $6.6 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 1.42 and a short float of 5% with 7.55 days to cover. Shares are down 3.5% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Valspar as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, notable return on equity and expanding profit margins. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • VALSPAR CORP has improved earnings per share by 9.6% 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, VALSPAR CORP increased its bottom line by earning $4.02 versus $3.20 in the prior year. This year, the market expects an improvement in earnings ($4.60 versus $4.02).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Chemicals industry average. The net income increased by 5.1% when compared to the same quarter one year prior, going from $97.83 million to $102.86 million.
  • 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 Chemicals industry and the overall market, VALSPAR CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 38.13% is the gross profit margin for VALSPAR CORP 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 8.95% trails the industry average.
  • Despite the weak revenue results, VAL has outperformed against the industry average of 18.9%. Since the same quarter one year prior, revenues slightly dropped by 6.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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