Trade-Ideas: Rosetta Resources (ROSE) Is Today's

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 Rosetta Resources ( ROSE) 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 Rosetta Resources as such a stock due to the following factors:

  • ROSE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $66.9 million.
  • ROSE has traded 58,566 shares today.
  • ROSE traded in a range 302.7% of the normal price range with a price range of $4.45.
  • ROSE traded above its daily resistance level (quality: 5 days, meaning that the stock is crossing a resistance level set by the last 5 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 ROSE:

Rosetta Resources Inc., an independent exploration and production company, is engaged in the acquisition and development of onshore energy resources in the United States. ROSE has a PE ratio of 17.3. Currently there are 8 analysts that rate Rosetta Resources a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Rosetta Resources has been 1.1 million shares per day over the past 30 days. Rosetta has a market cap of $3.1 billion and is part of the basic materials sector and energy industry. The stock has a beta of 2.29 and a short float of 9.3% with 3.81 days to cover. Shares are up 3.8% year-to-date as of the close of trading on Friday.

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 Rosetta Resources as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in stock price during the past year, good cash flow from operations and expanding profit margins. 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 1.5%. Since the same quarter one year prior, revenues rose by 20.5%. 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.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
  • Net operating cash flow has slightly increased to $151.22 million or 6.76% when compared to the same quarter last year. Despite an increase in cash flow, ROSETTA RESOURCES INC's cash flow growth rate is still lower than the industry average growth rate of 18.80%.
  • The gross profit margin for ROSETTA RESOURCES INC is currently very high, coming in at 76.51%. Regardless of ROSE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ROSE's net profit margin of 16.42% compares favorably to the industry average.
  • ROSETTA RESOURCES INC's earnings per share declined by 43.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ROSETTA RESOURCES INC increased its bottom line by earning $3.43 versus $3.01 in the prior year. For the next year, the market is expecting a contraction of 1.9% in earnings ($3.37 versus $3.43).

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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