Trade-Ideas LLC identified MSC Industrial Direct ( MSM) 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 MSC Industrial Direct as such a stock due to the following factors:

  • MSM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.3 million.
  • MSM has traded 66,736 shares today.
  • MSM traded in a range 256.2% of the normal price range with a price range of $3.17.
  • MSM traded above its daily resistance level (quality: 26 days, meaning that the stock is crossing a resistance level set by the last 26 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 MSM:

MSC Industrial Direct Co., Inc., together with its subsidiaries, markets and distributes various ranges of metalworking and maintenance, repair, and operations (MRO) products primarily in the United States. The stock currently has a dividend yield of 3.1%. MSM has a PE ratio of 15. Currently there are 2 analysts that rate MSC Industrial Direct a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for MSC Industrial Direct has been 465,300 shares per day over the past 30 days. MSC Industrial Direct has a market cap of $2.7 billion and is part of the services sector and wholesale industry. The stock has a beta of 0.72 and a short float of 13.1% with 16.49 days to cover. Shares are up 0.5% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates MSC Industrial Direct as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • MSM's revenue growth has slightly outpaced the industry average of 2.5%. Since the same quarter one year prior, revenues slightly increased by 0.1%. 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 current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.05, which illustrates the ability to avoid short-term cash problems.
  • 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. Compared to other companies in the Trading Companies & Distributors industry and the overall market on the basis of return on equity, MSC INDUSTRIAL DIRECT has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Looking at the price performance of MSM's shares over the past 12 months, there is not much good news to report: the stock is down 29.16%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • MSC INDUSTRIAL DIRECT' earnings per share from the most recent quarter came in slightly below the year earlier quarter. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, MSC INDUSTRIAL DIRECT reported lower earnings of $3.73 versus $3.76 in the prior year. For the next year, the market is expecting a contraction of 2.1% in earnings ($3.65 versus $3.73).

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