Trade-Ideas LLC identified Kansas City Southern ( KSU) 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 Kansas City Southern as such a stock due to the following factors:

  • KSU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $123.2 million.
  • KSU has traded 1.9 million shares today.
  • KSU traded in a range 208.6% of the normal price range with a price range of $4.77.
  • KSU traded above its daily resistance level (quality: 82 days, meaning that the stock is crossing a resistance level set by the last 82 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 KSU:

Kansas City Southern, through its subsidiaries, provides freight rail transportation services. The company operates north/south rail route between Kansas City, Missouri, and various ports along the Gulf of Mexico in Alabama, Louisiana, Mississippi, and Texas. The stock currently has a dividend yield of 1.4%. KSU has a PE ratio of 21. Currently there are 5 analysts that rate Kansas City Southern a buy, 2 analysts rate it a sell, and 6 rate it a hold.

The average volume for Kansas City Southern has been 1.4 million shares per day over the past 30 days. Kansas City Southern has a market cap of $10.2 billion and is part of the services sector and transportation industry. The stock has a beta of 0.68 and a short float of 4% with 3.37 days to cover. Shares are up 28.1% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Kansas City Southern as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Road & Rail industry average. The net income increased by 6.9% when compared to the same quarter one year prior, going from $100.80 million to $107.80 million.
  • 46.60% is the gross profit margin for KANSAS CITY SOUTHERN which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 19.15% trails the industry average.
  • The debt-to-equity ratio is somewhat low, currently at 0.60, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.32 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Road & Rail industry and the overall market on the basis of return on equity, KANSAS CITY SOUTHERN has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Net operating cash flow has declined marginally to $160.30 million or 1.35% when compared to the same quarter last year. Despite a decrease in cash flow of 1.35%, KANSAS CITY SOUTHERN is in line with the industry average cash flow growth rate of -3.36%.

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