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Watch Out: Barbarians At The Gate For Hess (HES)

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 Hess ( HES) 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 Hess as such a stock due to the following factors:

  • HES has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $207.9 million.
  • HES has traded 580,553 shares today.
  • HES traded in a range 200.4% of the normal price range with a price range of $2.39.
  • HES traded above its daily resistance level (quality: 13 days, meaning that the stock is crossing a resistance level set by the last 13 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 HES with the Ticky from Trade-Ideas. See the FREE profile for HES NOW at Trade-Ideas

More details on HES:

Hess Corporation, an exploration and production (E&P) company, develops, produces, purchases, transports, and sells crude oil and natural gas worldwide. It operates through two segments, E&P, and Retail Marketing and Other. The stock currently has a dividend yield of 1.1%. HES has a PE ratio of 26.2. Currently there are 5 analysts that rate Hess a buy, no analysts rate it a sell, and 11 rate it a hold.

The average volume for Hess has been 2.5 million shares per day over the past 30 days. Hess has a market cap of $27.8 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.96 and a short float of 2.3% with 2.75 days to cover. Shares are up 6.8% year-to-date as of the close of trading on Tuesday.

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 Hess as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • HES's very impressive revenue growth greatly exceeded the industry average of 3.1%. Since the same quarter one year prior, revenues leaped by 60.2%. 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.
  • Net operating cash flow has increased to $1,158.00 million or 41.39% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 16.30%.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite 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.
  • 37.88% is the gross profit margin for HESS CORP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, HES's net profit margin of 6.94% compares favorably to the industry average.
  • HESS CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, HESS CORP increased its bottom line by earning $11.14 versus $5.38 in the prior year. For the next year, the market is expecting a contraction of 56.7% in earnings ($4.82 versus $11.14).

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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