Trade-Ideas LLC identified Canadian Pacific Railway ( CP) 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 Canadian Pacific Railway as such a stock due to the following factors:

  • CP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $120.7 million.
  • CP has traded 645,743 shares today.
  • CP traded in a range 227.7% of the normal price range with a price range of $7.07.
  • CP traded above its daily resistance level (quality: 88 days, meaning that the stock is crossing a resistance level set by the last 88 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 CP:

Canadian Pacific Railway Limited, together with its subsidiaries, operates a transcontinental railway in Canada and the United States. The stock currently has a dividend yield of 1.1%. CP has a PE ratio of 19. Currently there are 15 analysts that rate Canadian Pacific Railway a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Canadian Pacific Railway has been 1.1 million shares per day over the past 30 days. Canadian Pacific Railway has a market cap of $22.0 billion and is part of the services sector and transportation industry. The stock has a beta of 1.00 and a short float of 1.1% with 1.30 days to cover. Shares are up 12.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Canadian Pacific Railway as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, notable return on equity, expanding profit margins and growth in earnings per share. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Road & Rail industry. The net income increased by 68.8% when compared to the same quarter one year prior, rising from $320.00 million to $540.00 million.
  • 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. When compared to other companies in the Road & Rail industry and the overall market, CANADIAN PACIFIC RAILWAY LTD's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • 48.08% is the gross profit margin for CANADIAN PACIFIC RAILWAY LTD which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 33.94% significantly outperformed against the industry average.
  • CANADIAN PACIFIC RAILWAY LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CANADIAN PACIFIC RAILWAY LTD reported lower earnings of $8.40 versus $8.49 in the prior year. This year, the market expects an improvement in earnings ($10.40 versus $8.40).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 13.8%. Since the same quarter one year prior, revenues slightly dropped by 4.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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