Watch Out: Barbarians At The Gate For Chevron (CVX)

Trade-Ideas LLC identified Chevron (CVX) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Chevron

(

CVX

) 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 Chevron as such a stock due to the following factors:

  • CVX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $815.5 million.
  • CVX has traded 9.0 million shares today.
  • CVX traded in a range 209.8% of the normal price range with a price range of $4.26.
  • CVX traded above its daily resistance level (quality: 109 days, meaning that the stock is crossing a resistance level set by the last 109 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 CVX:

Chevron Corporation, through its subsidiaries, engages in the petroleum, chemicals, and power and energy operations worldwide. The company operates in two segments, Upstream and Downstream. The stock currently has a dividend yield of 4.8%. CVX has a PE ratio of 14. Currently there are 7 analysts that rate Chevron a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Chevron has been 11.9 million shares per day over the past 30 days. Chevron has a market cap of $169.1 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.13 and a short float of 1.7% with 3.65 days to cover. Shares are down 19% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Chevron as a

hold

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:

  • CVX's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.01, which illustrates the ability to avoid short-term cash problems.
  • CVX, with its decline in revenue, slightly underperformed the industry average of 33.1%. Since the same quarter one year prior, revenues fell by 34.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CHEVRON CORP's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for CHEVRON CORP is rather low; currently it is at 20.59%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.63% trails that of the industry average.

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