Watch Out: Barbarians At The Gate For Public Service Enterprise Group (PEG)

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 Public Service Enterprise Group ( PEG) 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 Public Service Enterprise Group as such a stock due to the following factors:

  • PEG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $139.2 million.
  • PEG has traded 4.7 million shares today.
  • PEG traded in a range 296.3% of the normal price range with a price range of $1.51.
  • PEG traded above its daily resistance level (quality: 294 days, meaning that the stock is crossing a resistance level set by the last 294 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 PEG:

Public Service Enterprise Group Incorporated, through its subsidiaries, operates as an energy company primarily in the northeastern and mid Atlantic United States. The stock currently has a dividend yield of 4.2%. PEG has a PE ratio of 14.0. Currently there are 3 analysts that rate Public Service Enterprise Group a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Public Service Enterprise Group has been 4.1 million shares per day over the past 30 days. Public Service Enterprise Group has a market cap of $17.8 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.07 and a short float of 3.8% with 5.03 days to cover. Shares are up 9.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Public Service Enterprise Group as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, good cash flow from operations, increase in stock price during the past year 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 greatly exceeded the industry average of 32.7%. Since the same quarter one year prior, revenues slightly increased by 6.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 40.13% is the gross profit margin for PUBLIC SERVICE ENTRP GRP INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.27% is above that of the industry average.
  • Net operating cash flow has increased to $1,092.00 million or 17.04% when compared to the same quarter last year. In addition, PUBLIC SERVICE ENTRP GRP INC has also vastly surpassed the industry average cash flow growth rate of -71.65%.
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • PUBLIC SERVICE ENTRP GRP INC has improved earnings per share by 13.2% 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, PUBLIC SERVICE ENTRP GRP INC reported lower earnings of $2.51 versus $2.77 in the prior year. This year, the market expects an improvement in earnings ($2.53 versus $2.51).

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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