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Trade-Ideas LLC identified

CenterPoint Energy

(

CNP

) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified CenterPoint Energy as such a stock due to the following factors:

  • CNP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $109.2 million.
  • CNP has traded 4.6 million shares today.
  • CNP is trading at 2.27 times the normal volume for the stock at this time of day.
  • CNP crossed above its 200-day simple moving average.

'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize on. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on CNP:

TheStreet Recommends

CenterPoint Energy, Inc. operates as a public utility holding company in the United States. The stock currently has a dividend yield of 5.9%. Currently there are 3 analysts that rate CenterPoint Energy a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for CenterPoint Energy has been 5.4 million shares per day over the past 30 days. CenterPoint Energy has a market cap of $7.5 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.50 and a short float of 3.3% with 2.26 days to cover. Shares are down 2.7% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates CenterPoint Energy as a

hold

. The company's strongest point has been its expanding profit margins. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:

  • CNP, with its decline in revenue, slightly underperformed the industry average of 3.1%. Since the same quarter one year prior, revenues slightly dropped by 9.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • CENTERPOINT ENERGY INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CENTERPOINT ENERGY INC increased its bottom line by earning $1.42 versus $0.72 in the prior year. For the next year, the market is expecting a contraction of 24.6% in earnings ($1.07 versus $1.42).
  • The share price of CENTERPOINT ENERGY INC has not done very well: it is down 22.94% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The debt-to-equity ratio is very high at 2.13 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, CNP has a quick ratio of 0.51, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Multi-Utilities industry and the overall market on the basis of return on equity, CENTERPOINT ENERGY INC underperformed against that of the industry average and is significantly less than that of the S&P 500.

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