Today's Momo Momentum Stock Is Continental Resources (CLR)

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 Continental Resources ( CLR) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Continental Resources as such a stock due to the following factors:

  • CLR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $175.0 million.
  • CLR has a PE ratio of 33.0.
  • CLR is currently in the upper 30% of its 1-year range.
  • CLR is in the upper 25% of its 20-day range.
  • CLR is in the upper 35% of its 5-day range.
  • CLR is currently trading above yesterday's high.
  • CLR has experienced a gap between today's open and yesterday's close of 1.3%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on CLR:

Continental Resources, Inc. is engaged in the exploration, development, and production of crude oil and natural gas properties in the north, south, and east regions of the United States. CLR has a PE ratio of 33.0. Currently there are 14 analysts that rate Continental Resources a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for Continental Resources has been 1.1 million shares per day over the past 30 days. Continental has a market cap of $25.3 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.85 and a short float of 15.3% with 5.19 days to cover. Shares are up 19.8% 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 Continental Resources as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 0.2%. Since the same quarter one year prior, revenues rose by 19.1%. 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 increased to $584.84 million or 20.79% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 5.61%.
  • The gross profit margin for CONTINENTAL RESOURCES INC is currently very high, coming in at 79.13%. Regardless of CLR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CLR's net profit margin of 16.19% significantly outperformed against the industry.
  • Compared to its closing price of one year ago, CLR's share price has jumped by 73.11%, exceeding the performance of the broader market during that same time frame. 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.
  • CONTINENTAL RESOURCES INC's earnings per share declined by 39.5% 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, CONTINENTAL RESOURCES INC increased its bottom line by earning $4.14 versus $4.06 in the prior year. This year, the market expects an improvement in earnings ($7.01 versus $4.14).

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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