Trade-Ideas: QEP Resources (QEP) 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 QEP Resources ( QEP) 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 QEP Resources as such a stock due to the following factors:

  • QEP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $53.2 million.
  • QEP has traded 142,436 shares today.
  • QEP traded in a range 212.8% of the normal price range with a price range of $1.42.
  • QEP traded above its daily resistance level (quality: 7 days, meaning that the stock is crossing a resistance level set by the last 7 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 QEP:

QEP Resources, Inc., through its subsidiaries, operates as an independent oil and natural gas exploration and production company. The stock currently has a dividend yield of 0.2%. QEP has a PE ratio of 28.8. Currently there are 6 analysts that rate QEP Resources a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for QEP Resources has been 1.5 million shares per day over the past 30 days. QEP has a market cap of $5.9 billion and is part of the basic materials sector and energy industry. The stock has a beta of 2.25 and a short float of 5% with 5.09 days to cover. Shares are up 6.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates QEP Resources as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and expanding profit margins. 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 came in higher than the industry average of 1.5%. Since the same quarter one year prior, revenues rose by 26.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • QEP RESOURCES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, QEP RESOURCES INC increased its bottom line by earning $0.89 versus $0.72 in the prior year. This year, the market expects an improvement in earnings ($1.33 versus $0.89).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 1023.3% when compared to the same quarter one year prior, rising from -$4.30 million to $39.70 million.
  • Net operating cash flow has significantly increased by 87.33% to $322.40 million when compared to the same quarter last year. In addition, QEP RESOURCES INC has also vastly surpassed the industry average cash flow growth rate of 18.80%.
  • The gross profit margin for QEP RESOURCES INC is rather high; currently it is at 54.96%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 4.49% trails the industry average.

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