Dynegy

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

One electric utilities player that insiders are loading up on here is Dynegy ( DYN). This company's primary business is the production and sale of electric energy, capacity and ancillary services from the fleet of 16 operating power plants in six states totaling approximately 11,600 megawatts of generating capacity. Insiders are buying this stock into some extreme weakness since shares are off by over 75% so far in 2012.

Dynegy has a market cap of $74 million and an enterprise value of $1.5. This stock trades at a reasonable valuation, with a price-to-sales of 0.06 and a price-to-book of 0.07. Its estimated growth rate for this year is 55.8%, and for next year it's pegged at 2.9%. This is far from a cash-rich company, since the total cash position on its balance sheet is $411 million and its total debt is a whopping $1.84 billion.

A beneficial owner just bought 636,982 shares, or around $366,000 worth of stock, at 49 cents to 58 cents per share.

>>25 Energy Stocks to Consider

From a technical perspective, DYN is currently trading above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock recently bottomed at 30 cents after falling hard from over $1.54 a share. After hitting that bottom, shares of DYN have started to make mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed DYN within range of triggering a major breakout trade.

If you're bullish on DYN, then I would look for long-biased trades once this stock breaks out above some near-term overhead resistance at 64 cents to 74 cents with high-volume. Look for volume on that move that hits near or above its three-month average action of 1,828,310 shares. If we get that action soon, then DYN could easily spike back towards $1.00 to $1.20 a share.

I would simply avoid DYN if this stock drops back below its 50-day at 49 cents or some more major support at 45 cents per share with heavy volume.

As of the most recently reported quarter, Dynegy was one of Carl Icahn's holdings.

If you liked this article you might like

Stocks at Highs as Crude Closes Above $50, Trump Takes International Trip

Stocks Climb as Crude Recaptures $50, Trump Sets Off for International Trip

Vistra Energy Approached Rival Dynegy With Takeover Offer

Stock Futures Creep Higher as D.C. Grows Quiet After Week of Bombshells

5 Things You Must Know Before the Market Opens Friday