Strong And Under The Radar Today: Encana (ECA)

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 Encana ( ECA) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Encana as such a stock due to the following factors:

  • ECA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $78.9 million.
  • ECA is making at least a new 3-day high.
  • ECA has a PE ratio of 52.6.
  • ECA is mentioned 1.90 times per day on StockTwits.
  • ECA has not yet been mentioned on StockTwits today.
  • ECA is currently in the upper 20% of its 1-year range.
  • ECA is in the upper 35% of its 20-day range.
  • ECA is in the upper 45% of its 5-day range.
  • ECA is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

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More details on ECA:

Encana Corporation, together with its subsidiaries, is engaged in exploration for, development, production, and marketing of natural gas, oil, and natural gas liquids in Canada and the United States. The stock currently has a dividend yield of 1.2%. ECA has a PE ratio of 52.6. Currently there are 8 analysts that rate Encana a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Encana has been 4.1 million shares per day over the past 30 days. Encana has a market cap of $16.8 billion and is part of the basic materials sector and energy industry. Shares are up 28% year-to-date as of the close of trading on Wednesday.

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 Encana as a hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive.

Highlights from the ratings report include:
  • Net operating cash flow has increased to $767.00 million or 38.44% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -5.36%.
  • ENCANA CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, ENCANA CORP turned its bottom line around by earning $0.31 versus -$3.79 in the prior year. This year, the market expects an improvement in earnings ($1.72 versus $0.31).
  • The gross profit margin for ENCANA CORP is rather high; currently it is at 52.58%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, ECA's net profit margin of 17.06% compares favorably to the industry average.
  • Compared to its closing price of one year ago, ECA's share price has jumped by 32.94%, exceeding the performance of the broader market during that same time frame. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 62.9% when compared to the same quarter one year ago, falling from $730.00 million to $271.00 million.

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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