Barbarian At The Gate: Semgroup (SEMG)

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 Semgroup ( SEMG) 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 Semgroup as such a stock due to the following factors:

  • SEMG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $24.8 million.
  • SEMG has traded 131,319 shares today.
  • SEMG traded in a range 543.8% of the normal price range with a price range of $6.10.
  • SEMG traded above its daily resistance level (quality: 533 days, meaning that the stock is crossing a resistance level set by the last 533 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 SEMG:

SemGroup Corporation, together with its subsidiaries, provides gathering, transportation, storage, distribution, marketing, and other midstream services. The stock currently has a dividend yield of 1.4%. SEMG has a PE ratio of 39.6. Currently there are 3 analysts that rate Semgroup a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Semgroup has been 428,600 shares per day over the past 30 days. Semgroup has a market cap of $2.6 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.89 and a short float of 2.3% with 2.73 days to cover. Shares are down 5.9% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Semgroup as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, good cash flow from operations, impressive record of earnings per share growth and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 1.9%. Since the same quarter one year prior, revenues rose by 28.8%. 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 exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income increased by 30.7% when compared to the same quarter one year prior, rising from -$2.77 million to -$1.92 million.
  • Net operating cash flow has increased to $41.08 million or 49.01% when compared to the same quarter last year. In addition, SEMGROUP CORP has also vastly surpassed the industry average cash flow growth rate of -48.26%.
  • SEMGROUP CORP has improved earnings per share by 16.7% 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. During the past fiscal year, SEMGROUP CORP increased its bottom line by earning $0.45 versus $0.29 in the prior year.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 33.07% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

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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