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Watch Out: Barbarians At The Gate For Plug Power (PLUG)

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 Plug Power ( PLUG) 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 Plug Power as such a stock due to the following factors:

  • PLUG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $37.0 million.
  • PLUG has traded 22.8 million shares today.
  • PLUG traded in a range 224.9% of the normal price range with a price range of $0.45.
  • PLUG traded above its daily resistance level (quality: 47 days, meaning that the stock is crossing a resistance level set by the last 47 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 PLUG:

Plug Power Inc., an alternative energy technology provider, is engaged in the design, development, manufacture, and commercialization of fuel cell systems for the industrial off-road markets worldwide. Currently there is 1 analyst that rates Plug Power a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Plug Power has been 25.8 million shares per day over the past 30 days. Plug has a market cap of $685.2 million and is part of the technology sector and electronics industry. The stock has a beta of 1.09 and a short float of 21.2% with 4.53 days to cover. Shares are up 176.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Plug Power as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and weak operating cash flow.

Highlights from the ratings report include:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Electrical Equipment industry. The net income has significantly decreased by 784.5% when compared to the same quarter one year ago, falling from -$8.58 million to -$75.86 million.
  • Net operating cash flow has decreased to -$8.89 million or 49.83% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Electrical Equipment industry and the overall market, PLUG POWER INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • PLUG, with its decline in revenue, slightly underperformed the industry average of 6.1%. Since the same quarter one year prior, revenues fell by 13.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • PLUG POWER INC 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. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PLUG POWER INC continued to lose money by earning -$0.79 versus -$0.94 in the prior year. This year, the market expects an improvement in earnings (-$0.11 versus -$0.79).

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