Trade-Ideas: Concho Resources (CXO) Is Today's New Lifetime High Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Concho Resources ( CXO) as a new lifetime high candidate. In addition to specific proprietary factors, Trade-Ideas identified Concho Resources as such a stock due to the following factors:

  • CXO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $175.6 million.
  • CXO has traded 1.3 million shares today.
  • CXO is trading at a new lifetime high.

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More details on CXO:

Concho Resources Inc. operates as an independent oil and natural gas company in the United States. It engages in the acquisition, development, and exploration of oil and natural gas properties. The company principally operates in the Permian Basin region of southeast New Mexico and West Texas. CXO has a PE ratio of 61.7. Currently there are 17 analysts that rate Concho Resources a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Concho Resources has been 997,700 shares per day over the past 30 days. Concho has a market cap of $11.2 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.91 and a short float of 4.1% with 2.56 days to cover. Shares are up 32.4% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Concho Resources as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 6.6%. Since the same quarter one year prior, revenues rose by 39.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has remained constant at $267.46 million with no significant change when compared to the same quarter last year. Along with maintaining stable cash flow from operations, the firm exceeded the industry average cash flow growth rate of -15.93%.
  • The gross profit margin for CONCHO RESOURCES INC is rather high; currently it is at 69.33%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, CXO's net profit margin of 15.05% compares favorably to the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, the stock's 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 the other strengths this company displays justify these higher price levels.
  • CXO's debt-to-equity ratio of 0.98 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that CXO's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.60 is low and demonstrates weak liquidity.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
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