SM Energy (SM) Is Today's Water-Logged And Getting Wetter 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 SM Energy ( SM) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified SM Energy as such a stock due to the following factors:

  • SM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $75.9 million.
  • SM has traded 587,805 shares today.
  • SM traded in a range 200.3% of the normal price range with a price range of $5.53.
  • SM traded below its daily resistance level (quality: 3 days, meaning that the stock is crossing a resistance level set by the last 3 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' 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 negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on SM:

SM Energy Company, an independent energy company, together with its subsidiaries, engages in the acquisition, exploration, exploitation, development, and production of crude oil, natural gas, and natural gas liquids in North America. The stock currently has a dividend yield of 0.1%. SM has a PE ratio of 65.8. Currently there are 14 analysts that rate SM Energy a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for SM Energy has been 907,000 shares per day over the past 30 days. SM Energy has a market cap of $6.1 billion and is part of the basic materials sector and energy industry. The stock has a beta of 2.15 and a short float of 5.1% with 3.98 days to cover. Shares are up 73.7% year-to-date as of the close of trading on Thursday.

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 SM Energy as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, good cash flow from operations, solid stock price performance and impressive record of earnings per share growth. We feel these 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:
  • SM's very impressive revenue growth greatly exceeded the industry average of 5.4%. Since the same quarter one year prior, revenues leaped by 59.8%. Growth in the company's revenue appears to have helped boost 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 Oil, Gas & Consumable Fuels industry. The net income increased by 284.4% when compared to the same quarter one year prior, rising from -$38.34 million to $70.69 million.
  • Net operating cash flow has significantly increased by 66.26% to $404.51 million when compared to the same quarter last year. In addition, SM ENERGY CO has also vastly surpassed the industry average cash flow growth rate of 1.02%.
  • Powered by its strong earnings growth of 279.31% and other important driving factors, this stock has surged by 80.38% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.
  • SM ENERGY CO reported significant earnings per share improvement 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, SM ENERGY CO swung to a loss, reporting -$0.84 versus $3.09 in the prior year. This year, the market expects an improvement in earnings ($4.61 versus -$0.84).

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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