Watch Out: Barbarians At The Gate For Enbridge (ENB)

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 Enbridge ( ENB) 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 Enbridge as such a stock due to the following factors:

  • ENB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $36.3 million.
  • ENB has traded 584,997 shares today.
  • ENB traded in a range 226.6% of the normal price range with a price range of $1.20.
  • ENB traded above its daily resistance level (quality: 53 days, meaning that the stock is crossing a resistance level set by the last 53 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 ENB:

Enbridge Inc. operates as an energy transportation and distribution company in the United States and Canada. Its Liquids Pipelines segment operates common carrier and contract crude oil, natural gas liquids (NGL), and refined products pipelines and terminals. The stock currently has a dividend yield of 3%. ENB has a PE ratio of 81.3. Currently there are 6 analysts that rate Enbridge a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Enbridge has been 947,100 shares per day over the past 30 days. Enbridge has a market cap of $35.1 billion and is part of the basic materials sector and energy industry. Shares are down 3.2% year-to-date as of the close of trading on Monday.

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 Enbridge as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 3.8%. Since the same quarter one year prior, revenues rose by 18.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 55.57% to $781.00 million when compared to the same quarter last year. In addition, ENBRIDGE INC has also vastly surpassed the industry average cash flow growth rate of -52.18%.
  • The share price of ENBRIDGE INC has not done very well: it is down 5.17% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ENBRIDGE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ENBRIDGE INC is currently extremely low, coming in at 1.93%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -2.59% trails 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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