Trade-Ideas: Gildan Activewear (GIL) Is Today's

Trade-Ideas LLC identified Gildan Activewear ( GIL) 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 Gildan Activewear as such a stock due to the following factors:

  • GIL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.4 million.
  • GIL has traded 1.1 million shares today.
  • GIL traded in a range 286.4% of the normal price range with a price range of $2.14.
  • GIL traded above its daily resistance level (quality: 1 day, meaning that the stock is crossing a resistance level set by the last 1 calendar day. 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 GIL:

Gildan Activewear Inc. manufactures and sells apparel products in the United States, Canada, Europe, the Asia-Pacific, and Latin America. . It operates in two segments, Printwear and Branded Apparel. The stock currently has a dividend yield of 1%. GIL has a PE ratio of 26. Currently there are 11 analysts that rate Gildan Activewear a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Gildan Activewear has been 681,600 shares per day over the past 30 days. Gildan Activewear has a market cap of $6.1 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 0.65 and a short float of 3.7% with 5.63 days to cover. Shares are down 13.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Gildan Activewear 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, reasonable valuation levels, expanding profit margins 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:
  • GIL's revenue growth trails the industry average of 17.1%. Since the same quarter one year prior, revenues slightly increased by 1.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • GIL's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, GIL has a quick ratio of 1.60, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 35.91% is the gross profit margin for GILDAN ACTIVEWEAR INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 18.24% is above that of the industry average.
  • Net operating cash flow has slightly increased to $190.48 million or 2.69% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -10.77%.

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