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Trade-Ideas: Dominion Resources (D) Is Today's Momo Momentum Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Dominion Resources (D) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Dominion Resources as such a stock due to the following factors:

  • D has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $175.0 million.
  • D has a PE ratio of 120.1.
  • D is currently in the upper 30% of its 1-year range.
  • D is in the upper 25% of its 20-day range.
  • D is in the upper 35% of its 5-day range.
  • D is currently trading above yesterday's high.
  • D has experienced a gap between today's open and yesterday's close of 0.7%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in D with the Ticky from Trade-Ideas. See the FREE profile for D NOW at Trade-Ideas

More details on D:

Dominion Resources, Inc., together with its subsidiaries, engages in producing and transporting energy in the United States. The company operates through three segments: Dominion Virginia Power (DVP), Dominion Generation, and Dominion Energy. The stock currently has a dividend yield of 3.6%. D has a PE ratio of 120.1. Currently there are 7 analysts that rate Dominion Resources a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Dominion Resources has been 2.7 million shares per day over the past 30 days. Dominion has a market cap of $36.2 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.07 and a short float of 2.3% with 4.67 days to cover. Shares are up 20.6% year to date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Dominion Resources as a buy. Among the primary strengths of the company is its solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 2.9%. Since the same quarter one year prior, revenues slightly dropped by 0.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • DOMINION RESOURCES INC's earnings per share declined by 7.8% in the most recent quarter compared to the same quarter a year ago. 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, DOMINION RESOURCES INC reported lower earnings of $0.61 versus $2.48 in the prior year. This year, the market expects an improvement in earnings ($3.33 versus $0.61).
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of 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.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Multi-Utilities industry. The net income has decreased by 21.7% when compared to the same quarter one year ago, dropping from $258.00 million to $202.00 million.
  • Currently the debt-to-equity ratio of 1.96 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.25, which clearly demonstrates the inability to cover short-term cash needs.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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