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 "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) 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 $67.0 million.
- SM has traded 7.2 million shares today.
- SM is trading at 15.99 times the normal volume for the stock at this time of day.
- SM crossed below its 200-day simple moving average.
'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend. EXCLUSIVE OFFER: Get the inside scoop on opportunities in SM with the Ticky from Trade-Ideas. See the FREE profile for SM NOW at Trade-Ideas 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 62.0. 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 862,500 shares per day over the past 30 days. SM Energy has a market cap of $5.8 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.97 and a short float of 3.7% with 2.07 days to cover. Shares are up 3.6% 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 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 2.4%. 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 -50.31%.
- Powered by its strong earnings growth of 279.31% and other important driving factors, this stock has surged by 44.58% 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 ($4.57 versus -$0.84).
- You can view the full SM Energy Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.