Trade-Ideas: NRG Energy (NRG) Is Today's "Barbarian At The Gate" 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 NRG Energy (NRG) 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 NRG Energy as such a stock due to the following factors:
- NRG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $85.0 million.
- NRG has traded 1.6 million shares today.
- NRG traded in a range 279.4% of the normal price range with a price range of $1.27.
- NRG traded above its daily resistance level (quality: 531 days, meaning that the stock is crossing a resistance level set by the last 531 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.EXCLUSIVE OFFER: Get the inside scoop on opportunities in NRG with the Ticky from Trade-Ideas. See the FREE profile for NRG NOW at Trade-IdeasMore details on NRG: NRG Energy, Inc., together with its subsidiaries, operates as an integrated wholesale power generation and retail electricity company. The company engages in the ownership, development, construction, expansion, modification, refurbishment, and operation of power generation facilities. The stock currently has a dividend yield of 1.7%. NRG has a PE ratio of 18.1. Currently there are 9 analysts that rate NRG Energy a buy, no analysts rate it a sell, and 1 rates it a hold.The average volume for NRG Energy has been 3.5 million shares per day over the past 30 days. NRG Energy has a market cap of $9.0 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.55 and a short float of 3.6% with 3.45 days to cover. Shares are up 21.9% year to date as of the close of trading on Friday.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 NRG Energy as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, solid stock price performance, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 15.6%. Since the same quarter one year prior, revenues rose by 35.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- 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. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- Despite the current debt-to-equity ratio of 1.67, it is still below the industry average, suggesting that this level of debt is acceptable within the Independent Power Producers & Energy Traders industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.77 is weak.
- 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. Compared to other companies in the Independent Power Producers & Energy Traders industry and the overall market on the basis of return on equity, NRG ENERGY INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- You can view the full NRG Energy Ratings Report.
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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