Trade-Ideas LLC identified General Dynamics ( GD) 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 General Dynamics as such a stock due to the following factors:

  • GD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $229.3 million.
  • GD has traded 1.5 million shares today.
  • GD traded in a range 246.6% of the normal price range with a price range of $7.52.
  • GD traded above its daily resistance level (quality: 13 days, meaning that the stock is crossing a resistance level set by the last 13 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 GD:

General Dynamics Corporation operates as aerospace and defense company worldwide. It operates through four business groups: Aerospace; Combat Systems; Information Systems and Technology; and Marine Systems. The stock currently has a dividend yield of 2.2%. GD has a PE ratio of 14. Currently there are 12 analysts that rate General Dynamics a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for General Dynamics has been 1.5 million shares per day over the past 30 days. General Dynamics has a market cap of $39.4 billion and is part of the industrial goods sector and aerospace/defense industry. The stock has a beta of 0.80 and a short float of 0.7% with 1.06 days to cover. Shares are down 7.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates General Dynamics as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • GD's revenue growth has slightly outpaced the industry average of 1.5%. Since the same quarter one year prior, revenues slightly increased by 3.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • GENERAL DYNAMICS CORP has improved earnings per share by 11.2% 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, GENERAL DYNAMICS CORP increased its bottom line by earning $7.83 versus $7.03 in the prior year. This year, the market expects an improvement in earnings ($9.05 versus $7.83).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Aerospace & Defense industry average. The net income increased by 5.3% when compared to the same quarter one year prior, going from $696.00 million to $733.00 million.
  • 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. Despite the fact that GD's debt-to-equity ratio is low, the quick ratio, which is currently 0.54, displays a potential problem in covering short-term cash needs.

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