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Watch Out: Barbarians At The Gate For NuStar Energy L.P (NS)

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 NuStar Energy L.P ( NS) 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 NuStar Energy L.P as such a stock due to the following factors:

  • NS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $34.4 million.
  • NS has traded 895,540 shares today.
  • NS traded in a range 205.6% of the normal price range with a price range of $2.84.
  • NS traded above its daily resistance level (quality: 165 days, meaning that the stock is crossing a resistance level set by the last 165 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 NS:

NuStar Energy L.P. engages in the terminalling, storage, and transportation of petroleum products primarily in the United States and the Netherlands. The company operates in three segments: Storage, Transportation, and Asphalt and Fuels Marketing. The stock currently has a dividend yield of 9.8%. NS has a PE ratio of 85.6. Currently there are no analysts that rate NuStar Energy L.P a buy, 2 analysts rate it a sell, and 8 rate it a hold.

The average volume for NuStar Energy L.P has been 497,400 shares per day over the past 30 days. NuStar Energy L.P has a market cap of $3.5 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.04 and a short float of 1.4% with 1.24 days to cover. Shares are up 4.8% year to date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates NuStar Energy L.P as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, good cash flow from operations and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and poor profit margins.

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 Oil, Gas & Consumable Fuels industry. The net income increased by 113.4% when compared to the same quarter one year prior, rising from -$246.74 million to $33.09 million.
  • Net operating cash flow has significantly increased by 108.84% to $87.16 million when compared to the same quarter last year. In addition, NUSTAR ENERGY LP has also vastly surpassed the industry average cash flow growth rate of -20.04%.
  • NUSTAR ENERGY LP 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, NUSTAR ENERGY LP swung to a loss, reporting -$2.95 versus $2.79 in the prior year. This year, the market expects an improvement in earnings ($1.07 versus -$2.95).
  • The debt-to-equity ratio of 1.03 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, NS maintains a poor quick ratio of 0.90, which illustrates the inability to avoid short-term cash problems.
  • In its most recent trading session, NS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

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