Trade-Ideas LLC identified Brocade Communications Systems ( BRCD) 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 Brocade Communications Systems as such a stock due to the following factors:

  • BRCD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $35.7 million.
  • BRCD has traded 1.1 million shares today.
  • BRCD traded in a range 255.1% of the normal price range with a price range of $0.60.
  • BRCD traded above its daily resistance level (quality: 33 days, meaning that the stock is crossing a resistance level set by the last 33 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 BRCD:

Brocade Communications Systems, Inc. provides storage area networking (SAN) and Internet protocol (IP) networking solutions for businesses and organizations worldwide. It operates through three segments: SAN Products, IP Networking Products, and Global Services. The stock currently has a dividend yield of 2.3%. BRCD has a PE ratio of 1. Currently there is 1 analyst that rates Brocade Communications Systems a buy, 1 analyst rates it a sell, and 15 rate it a hold.

The average volume for Brocade Communications Systems has been 4.7 million shares per day over the past 30 days. Brocade Communications Systems has a market cap of $3.2 billion and is part of the technology sector and computer hardware industry. The stock has a beta of 0.64 and a short float of 1.3% with 1.14 days to cover. Shares are down 14.8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Brocade Communications Systems as a buy. 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, notable return on equity, attractive valuation levels and growth in earnings per share. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 13.9%. Since the same quarter one year prior, revenues slightly increased by 4.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 2.98, which clearly demonstrates the ability to cover short-term cash needs.
  • 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 Communications Equipment industry and the overall market, BROCADE COMMUNICATIONS SYS's return on equity exceeds that of both the industry average and the S&P 500.
  • BROCADE COMMUNICATIONS SYS has improved earnings per share by 5.3% 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. During the past fiscal year, BROCADE COMMUNICATIONS SYS increased its bottom line by earning $0.79 versus $0.54 in the prior year. This year, the market expects an improvement in earnings ($1.00 versus $0.79).

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