Barbarian At The Gate: Northeast Utilities (NU)
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 Northeast Utilities (NU) 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 Northeast Utilities as such a stock due to the following factors:
- NU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $49.4 million.
- NU has traded 681,118 shares today.
- NU traded in a range 216.1% of the normal price range with a price range of $1.08.
- NU traded above its daily resistance level (quality: 40 days, meaning that the stock is crossing a resistance level set by the last 40 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 NU with the Ticky from Trade-Ideas. See the FREE profile for NU NOW at Trade-IdeasMore details on NU: Northeast Utilities, a public utility company, through its subsidiaries, is engaged in the energy delivery business. The company is involved in generation, transmission, and distribution of electricity; and distribution of natural gas. The stock currently has a dividend yield of 3.4%. NU has a PE ratio of 18.2. Currently there are 8 analysts that rate Northeast Utilities a buy, no analysts rate it a sell, and 3 rate it a hold.The average volume for Northeast Utilities has been 1.4 million shares per day over the past 30 days. Northeast Utilities has a market cap of $14.5 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.34 and a short float of 1.9% with 5.52 days to cover. Shares are up 7.5% 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 Northeast Utilities as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins.Highlights from the ratings report include:
- NU's revenue growth has slightly outpaced the industry average of 10.5%. Since the same quarter one year prior, revenues rose by 14.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- NORTHEAST UTILITIES's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, NORTHEAST UTILITIES increased its bottom line by earning $2.48 versus $1.92 in the prior year. This year, the market expects an improvement in earnings ($2.70 versus $2.48).
- The net income growth from the same quarter one year ago has exceeded that of the Electric Utilities industry average, but is less than that of the S&P 500. The net income increased by 3.4% when compared to the same quarter one year prior, going from $228.09 million to $235.96 million.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- Net operating cash flow has slightly increased to $493.80 million or 4.36% when compared to the same quarter last year. Despite an increase in cash flow, NORTHEAST UTILITIES's cash flow growth rate is still lower than the industry average growth rate of 18.42%.
- You can view the full Northeast Utilities 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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