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Today's Water-Logged And Getting Wetter Stock: MarkWest Energy Partners (MWE)

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 MarkWest Energy Partners ( MWE) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified MarkWest Energy Partners as such a stock due to the following factors:

  • MWE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $88.8 million.
  • MWE has traded 655,669 shares today.
  • MWE traded in a range 204.9% of the normal price range with a price range of $2.79.
  • MWE traded below 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 'Water-Logged and Getting Wetter' 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 negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on MWE:

MarkWest Energy Partners, L.P. is engaged in the gathering, processing, and transportation of natural gas. The company is also engaged in the gathering, transportation, fractionation, storage, and marketing of natural gas liquids; and the gathering and transportation of crude oil. The stock currently has a dividend yield of 4.8%. MWE has a PE ratio of 167.7. Currently there are 3 analysts that rate MarkWest Energy Partners a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for MarkWest Energy Partners has been 921,500 shares per day over the past 30 days. MarkWest Energy has a market cap of $11.7 billion and is part of the basic materials sector and energy industry. The stock has a beta of 0.72 and a short float of 2% with 2.59 days to cover. Shares are up 9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates MarkWest Energy Partners as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, good cash flow from operations, growth in earnings per share and expanding profit margins. 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 greatly exceeded the industry average of 3.2%. Since the same quarter one year prior, revenues rose by 37.3%. 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 180.8% when compared to the same quarter one year prior, rising from -$15.46 million to $12.49 million.
  • Net operating cash flow has increased to $112.37 million or 32.13% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 17.65%.
  • MARKWEST ENERGY PARTNERS 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, MARKWEST ENERGY PARTNERS LP reported lower earnings of $0.21 versus $1.70 in the prior year. This year, the market expects an improvement in earnings ($0.78 versus $0.21).
  • 43.96% is the gross profit margin for MARKWEST ENERGY PARTNERS LP which we consider to be strong. Regardless of MWE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.43% trails the industry average.

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