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Xcel Energy (XEL) Is Today's Roof Leaker 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 Xcel Energy ( XEL) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Xcel Energy as such a stock due to the following factors:

  • XEL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $70.0 million.
  • XEL has traded 352,963 shares today.
  • XEL is trading at 3.49 times the normal volume for the stock at this time of day.
  • XEL crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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

More details on XEL:

Xcel Energy Inc., through its subsidiaries, is engaged in the generation, purchase, transmission, distribution, and sale of electricity in the United States. It operates through Regulated Electric Utility, Regulated Natural Gas Utility, and All Other segments. The stock currently has a dividend yield of 3.9%. XEL has a PE ratio of 15.8. Currently there are 3 analysts that rate Xcel Energy a buy, 1 analyst rates it a sell, and 9 rate it a hold.

The average volume for Xcel Energy has been 2.4 million shares per day over the past 30 days. Xcel Energy has a market cap of $15.5 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.14 and a short float of 3.4% with 7.43 days to cover. Shares are up 10% 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 Xcel Energy as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth 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:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 5.7%. Since the same quarter one year prior, revenues slightly increased by 4.1%. 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.
  • XCEL ENERGY INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, XCEL ENERGY INC increased its bottom line by earning $1.91 versus $1.86 in the prior year. This year, the market expects an improvement in earnings ($2.00 versus $1.91).
  • In its most recent trading session, XEL has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
  • The change in net income 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 has decreased by 0.9% when compared to the same quarter one year ago, dropping from $196.86 million to $195.16 million.
  • The gross profit margin for XCEL ENERGY INC is rather low; currently it is at 24.30%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 7.26% trails that of the industry average.

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