Water-Logged And Getting Wetter Stock Of The Day: American Electric Power (AEP)

Trade-Ideas LLC identified American Electric Power (AEP) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

American Electric Power

(

AEP

) 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 American Electric Power as such a stock due to the following factors:

  • AEP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $149.3 million.
  • AEP has traded 1.9 million shares today.
  • AEP traded in a range 201.8% of the normal price range with a price range of $1.90.
  • AEP traded below its daily resistance level (quality: 55 days, meaning that the stock is crossing a resistance level set by the last 55 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 AEP:

American Electric Power Company, Inc., a public utility holding company, engages in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers. The stock currently has a dividend yield of 4%. AEP has a PE ratio of 16. Currently there are 8 analysts that rate American Electric Power a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for American Electric Power has been 3.0 million shares per day over the past 30 days. American Electric has a market cap of $27.8 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.40 and a short float of 1.5% with 2.65 days to cover. Shares are down 7% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates American Electric Power as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, good cash flow from operations and attractive valuation levels. We feel its 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:

  • AEP's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 6.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • AMERICAN ELECTRIC POWER CO has improved earnings per share by 5.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, AMERICAN ELECTRIC POWER CO increased its bottom line by earning $3.31 versus $3.04 in the prior year. This year, the market expects an improvement in earnings ($3.72 versus $3.31).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Electric Utilities industry average. The net income increased by 5.3% when compared to the same quarter one year prior, going from $493.00 million to $519.00 million.
  • Net operating cash flow has increased to $1,707.00 million or 11.71% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -14.09%.

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