Watch Out: Barbarians At The Gate For Hess (HES)

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 Hess ( HES) 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 Hess as such a stock due to the following factors:

  • HES has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $205.9 million.
  • HES has traded 394,543 shares today.
  • HES traded in a range 235.8% of the normal price range with a price range of $3.15.
  • HES traded above its daily resistance level (quality: 13 days, meaning that the stock is crossing a resistance level set by the last 13 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 HES:

Hess Corporation, together with its subsidiaries, operates as an independent energy company worldwide. It operates in two segments, Exploration and Production (E&P), and Marketing and Refining (M&R). The stock currently has a dividend yield of 1.3%. HES has a PE ratio of 7.6. Currently there are 7 analysts that rate Hess a buy, no analysts rate it a sell, and 10 rate it a hold.

The average volume for Hess has been 2.4 million shares per day over the past 30 days. Hess has a market cap of $25.5 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.95 and a short float of 1.8% with 2.17 days to cover. Shares are down 7.5% year-to-date as of the close of trading on Tuesday.

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 Hess as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, reasonable valuation levels, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, HES's share price has jumped by 33.84%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HES should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The gross profit margin for HESS CORP is rather high; currently it is at 65.52%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.52% is above that of the industry average.
  • HESS CORP's earnings per share declined by 27.7% 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, HESS CORP increased its bottom line by earning $5.73 versus $5.01 in the prior year. This year, the market expects an improvement in earnings ($5.74 versus $5.73).
  • HES's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.30 is very weak and demonstrates a lack of ability to pay short-term obligations.

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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