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

  • PCAR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $139.9 million.
  • PCAR has traded 2.0 million shares today.
  • PCAR traded in a range 227.5% of the normal price range with a price range of $3.73.
  • PCAR traded above its daily resistance level (quality: 35 days, meaning that the stock is crossing a resistance level set by the last 35 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 PCAR:

PACCAR Inc, together with its subsidiaries, designs, manufactures, and distributes light, medium, and heavy-duty trucks and related aftermarket parts worldwide. It operates through three segments: Truck, Parts, and Financial Services. The stock currently has a dividend yield of 2%. PCAR has a PE ratio of 1. Currently there are 4 analysts that rate PACCAR a buy, 1 analyst rates it a sell, and 12 rate it a hold.

The average volume for PACCAR has been 2.5 million shares per day over the past 30 days. PACCAR has a market cap of $16.6 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 1.35 and a short float of 4.8% with 6.29 days to cover. Shares are down 0.1% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates PACCAR as a hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • PACCAR INC has improved earnings per share by 16.3% 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. This trend suggests that the performance of the business is improving. During the past fiscal year, PACCAR INC increased its bottom line by earning $3.82 versus $3.30 in the prior year. This year, the market expects an improvement in earnings ($4.56 versus $3.82).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 16.1% when compared to the same quarter one year prior, going from $371.40 million to $431.20 million.
  • Despite the weak revenue results, PCAR has outperformed against the industry average of 21.7%. Since the same quarter one year prior, revenues slightly dropped by 1.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Net operating cash flow has decreased to $664.10 million or 12.71% when compared to the same quarter last year. Despite a decrease in cash flow of 12.71%, PACCAR INC is in line with the industry average cash flow growth rate of -18.37%.
  • PCAR's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 29.64%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

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