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Anadarko Petroleum (APC) Highlighted As Storm The Castle 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 Anadarko Petroleum ( APC) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Anadarko Petroleum as such a stock due to the following factors:

  • APC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $238.4 million.
  • APC has traded 1.4 million shares today.
  • APC is trading at 1.81 times the normal volume for the stock at this time of day.
  • APC crossed above its 200-day simple moving average.

'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize on. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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

More details on APC:

Anadarko Petroleum Corporation engages in the exploration, development, production, and marketing of natural gas, crude oil, condensate, and natural gas liquids (NGLs) in the United States and internationally. The stock currently has a dividend yield of 0.8%. APC has a PE ratio of 25.3. Currently there are 16 analysts that rate Anadarko Petroleum a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Anadarko Petroleum has been 2.8 million shares per day over the past 30 days. Anadarko has a market cap of $44.6 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.66 and a short float of 1.3% with 2.39 days to cover. Shares are up 19.2% year to date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Anadarko Petroleum as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, expanding profit margins, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 5.5%. Since the same quarter one year prior, revenues rose by 15.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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 50.4% when compared to the same quarter one year prior, rising from $121.00 million to $182.00 million.
  • The gross profit margin for ANADARKO PETROLEUM CORP is rather high; currently it is at 56.82%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.80% trails the industry average.
  • ANADARKO PETROLEUM CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ANADARKO PETROLEUM CORP turned its bottom line around by earning $4.74 versus -$5.33 in the prior year. For the next year, the market is expecting a contraction of 9.9% in earnings ($4.27 versus $4.74).
  • APC's debt-to-equity ratio of 0.61 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.35 is sturdy.

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