Trade-Ideas LLC identified Cognizant Technology Solutions ( CTSH) 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 Cognizant Technology Solutions as such a stock due to the following factors:

  • CTSH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $288.6 million.
  • CTSH has traded 4.8 million shares today.
  • CTSH traded in a range 204.7% of the normal price range with a price range of $3.03.
  • CTSH traded above its daily resistance level (quality: 14 days, meaning that the stock is crossing a resistance level set by the last 14 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 CTSH:

Cognizant Technology Solutions Corporation provides information technology (IT), consulting, and business process services worldwide. The company operates through four segments: Financial Services, Healthcare, Manufacturing/Retail/Logistics, and Other. CTSH has a PE ratio of 23. Currently there are 17 analysts that rate Cognizant Technology Solutions a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Cognizant Technology Solutions has been 3.6 million shares per day over the past 30 days. Cognizant Technology has a market cap of $36.3 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.15 and a short float of 1.4% with 1.65 days to cover. Shares are down 3.7% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cognizant Technology Solutions as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, growth in earnings per share and good cash flow from operations. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 26.9%. Since the same quarter one year prior, revenues rose by 23.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CTSH's debt-to-equity ratio is very low at 0.11 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.10, which clearly demonstrates the ability to cover short-term cash needs.
  • COGNIZANT TECH SOLUTIONS has improved earnings per share by 12.1% 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, COGNIZANT TECH SOLUTIONS increased its bottom line by earning $2.35 versus $2.02 in the prior year. This year, the market expects an improvement in earnings ($3.04 versus $2.35).
  • Net operating cash flow has increased to $817.90 million or 40.24% when compared to the same quarter last year. In addition, COGNIZANT TECH SOLUTIONS has also vastly surpassed the industry average cash flow growth rate of -12.86%.

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