Spectra Energy (SE) Marked As A Barbarian At The Gate

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 Spectra Energy ( SE) 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 Spectra Energy as such a stock due to the following factors:

  • SE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $141.2 million.
  • SE has traded 2.5 million shares today.
  • SE traded in a range 428.5% of the normal price range with a price range of $3.67.
  • SE traded above its daily resistance level (quality: 535 days, meaning that the stock is crossing a resistance level set by the last 535 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 SE:

Spectra Energy Corp, through its subsidiaries, owns and operates a portfolio of natural gas-related energy assets in North America. The company's U.S. The stock currently has a dividend yield of 3.7%. SE has a PE ratio of 22.3. Currently there are 7 analysts that rate Spectra Energy a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Spectra Energy has been 3.0 million shares per day over the past 30 days. Spectra Energy has a market cap of $24.5 billion and is part of the basic materials sector and energy industry. The stock has a beta of 0.84 and a short float of 1.5% with 2.57 days to cover. Shares are up 3.3% 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 Spectra Energy as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, solid stock price performance and growth in earnings per share. 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:
  • The revenue growth came in higher than the industry average of 1.9%. Since the same quarter one year prior, revenues rose by 16.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income increased by 10.8% when compared to the same quarter one year prior, going from $213.00 million to $236.00 million.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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.
  • SPECTRA ENERGY CORP has improved earnings per share by 9.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, SPECTRA ENERGY CORP increased its bottom line by earning $1.55 versus $1.43 in the prior year. For the next year, the market is expecting a contraction of 2.9% in earnings ($1.51 versus $1.55).
  • The gross profit margin for SPECTRA ENERGY CORP is currently lower than what is desirable, coming in at 30.93%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 15.07% is above that of the industry average.

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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