Trade-Ideas LLC identified

Great Plains Energy

(

GXP

) 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 Great Plains Energy as such a stock due to the following factors:

  • GXP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $87.9 million.
  • GXP has traded 2.4 million shares today.
  • GXP is trading at 4.28 times the normal volume for the stock at this time of day.
  • GXP 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.

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More details on GXP:

Great Plains Energy Incorporated, through its subsidiaries, generates, transmits, distributes, and sells electricity in Missouri and Kansas. It also provides regulated steam services in St. Joseph, Missouri. The stock currently has a dividend yield of 3.6%. GXP has a PE ratio of 21. Currently there are no analysts that rate Great Plains Energy a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Great Plains Energy has been 1.8 million shares per day over the past 30 days. Great Plains Energy has a market cap of $4.5 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.47 and a short float of 1.6% with 1.57 days to cover. Shares are up 6.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Great Plains Energy as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, increase in net income, solid stock price performance and growth in earnings per share. 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:

  • The revenue growth came in higher than the industry average of 8.1%. Since the same quarter one year prior, revenues slightly increased by 4.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electric Utilities industry. The net income increased by 39.7% when compared to the same quarter one year prior, rising from $18.90 million to $26.40 million.
  • Net operating cash flow has increased to $127.30 million or 28.06% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 8.76%.
  • 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. Although other factors naturally played a role, the company's strong earnings growth was key. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • GREAT PLAINS ENERGY INC has improved earnings per share by 41.7% 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, GREAT PLAINS ENERGY INC reported lower earnings of $1.37 versus $1.56 in the prior year. This year, the market expects an improvement in earnings ($1.74 versus $1.37).

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