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

  • HSY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $158.9 million.
  • HSY has traded 366,413 shares today.
  • HSY traded in a range 481.8% of the normal price range with a price range of $6.99.
  • HSY traded above its daily resistance level (quality: 489 days, meaning that the stock is crossing a resistance level set by the last 489 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 HSY:

The Hershey Company manufactures, imports, markets, distributes, and sells confectionery products. The company operates through two segments, North America, and International and Other. The stock currently has a dividend yield of 2.4%. HSY has a PE ratio of 41. Currently there are 2 analysts that rate Hershey a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Hershey has been 1.3 million shares per day over the past 30 days. Hershey has a market cap of $20.5 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.37 and a short float of 4.3% with 4.85 days to cover. Shares are up 8.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Hershey as a buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins, good cash flow from operations, notable return on equity and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • 47.94% is the gross profit margin for HERSHEY CO which we consider to be strong. Regardless of HSY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HSY's net profit margin of 12.56% compares favorably to the industry average.
  • HERSHEY CO' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, HERSHEY CO reported lower earnings of $2.31 versus $3.77 in the prior year. This year, the market expects an improvement in earnings ($4.25 versus $2.31).
  • HSY, with its decline in revenue, underperformed when compared the industry average of 16.6%. Since the same quarter one year prior, revenues slightly dropped by 5.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Net operating cash flow has remained constant at $257.12 million with no significant change when compared to the same quarter last year. This quarter, HERSHEY CO's cash flow growth rate has remained relatively unchanged and is slightly below the industry average.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

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