Trade-Ideas: CMS Energy (CMS) Is Today's "Barbarian At The Gate" 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
(
) 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 CMS Energy as such a stock due to the following factors:
- CMS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $93.3 million.
- CMS has traded 3.6 million shares today.
- CMS traded in a range 207.8% of the normal price range with a price range of $1.27.
- CMS traded above its daily resistance level (quality: 6 days, meaning that the stock is crossing a resistance level set by the last 6 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 CMS:
CMS Energy Corporation operates as an energy company primarily in Michigan, the United States. The stock currently has a dividend yield of 3.5%. CMS has a PE ratio of 19.0. Currently there are 6 analysts that rate CMS Energy a buy, no analysts rate it a sell, and 6 rate it a hold.
The average volume for CMS Energy has been 2.5 million shares per day over the past 30 days. CMS Energy has a market cap of $9.1 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.04 and a short float of 1.6% with 1.50 days to cover. Shares are down 5.5% year-to-date as of the close of trading on Wednesday.
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Analysis:
rates CMS Energy as a
. 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 reasonable valuation levels. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
Highlights from the ratings report include:
- CMS's revenue growth has slightly outpaced the industry average of 2.9%. Since the same quarter one year prior, revenues slightly increased by 1.3%. 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 significantly increased by 60.06% to $485.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 45.60%.
- 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.
- CMS ENERGY CORP's earnings per share declined by 5.4% 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, CMS ENERGY CORP increased its bottom line by earning $1.74 versus $1.65 in the prior year. This year, the market expects an improvement in earnings ($1.88 versus $1.74).
- You can view the full CMS Energy Ratings Report.
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