Barbarian At The Gate: Xcel Energy (XEL)

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 Xcel Energy ( XEL) 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 Xcel Energy as such a stock due to the following factors:

  • XEL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $84.1 million.
  • XEL has traded 2.8 million shares today.
  • XEL traded in a range 205% of the normal price range with a price range of $0.64.
  • XEL 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 XEL:

Xcel Energy Inc., through its subsidiaries, is engaged in the generation, purchase, transmission, distribution, and sale of electricity in the United States. It operates through Regulated Electric Utility, Regulated Natural Gas Utility, and All Other segments. The stock currently has a dividend yield of 4%. XEL has a PE ratio of 15.6. Currently there are 4 analysts that rate Xcel Energy a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Xcel Energy has been 2.9 million shares per day over the past 30 days. Xcel Energy has a market cap of $14.9 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.14 and a short float of 2.8% with 4.96 days to cover. Shares are up 7% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Xcel Energy as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, good cash flow from operations, increase in net income and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • XEL's revenue growth has slightly outpaced the industry average of 3.3%. Since the same quarter one year prior, revenues slightly increased by 7.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • XCEL ENERGY INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, XCEL ENERGY INC increased its bottom line by earning $1.91 versus $1.86 in the prior year. This year, the market expects an improvement in earnings ($2.00 versus $1.91).
  • Net operating cash flow has increased to $581.13 million or 34.26% when compared to the same quarter last year. Despite an increase in cash flow, XCEL ENERGY INC's average is still marginally south of the industry average growth rate of 42.69%.
  • In its most recent trading session, XEL has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
  • The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Electric Utilities industry average. The net income increased by 7.0% when compared to the same quarter one year prior, going from $140.17 million to $150.06 million.

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