Trade-Ideas LLC identified

Westar Energy

(

WR

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

  • WR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $62.0 million.
  • WR has traded 489,065 shares today.
  • WR traded in a range 206.5% of the normal price range with a price range of $1.68.
  • WR traded above its daily resistance level (quality: 532 days, meaning that the stock is crossing a resistance level set by the last 532 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 WR:

Westar Energy, Inc., an electric utility company, generates, transmits, and distributes electricity in Kansas. The stock currently has a dividend yield of 2.9%. WR has a PE ratio of 24. Currently there is 1 analyst that rates Westar Energy a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Westar Energy has been 1.3 million shares per day over the past 30 days. Westar Energy has a market cap of $7.4 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.44 and a short float of 2% with 2.43 days to cover. Shares are up 22.5% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Westar Energy as a

buy

. The company's strengths can be seen in multiple areas, such as its increase in net income, good cash flow from operations, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • 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 28.6% when compared to the same quarter one year prior, rising from $50.98 million to $65.59 million.
  • Net operating cash flow has increased to $238.88 million or 12.41% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -1.53%.
  • 39.59% is the gross profit margin for WESTAR ENERGY INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 11.51% trails the industry average.
  • The debt-to-equity ratio is somewhat low, currently at 0.99, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.21 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 44.38% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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