Trade-Ideas: Sempra Energy (SRE) 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 Sempra Energy ( SRE) 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 Sempra Energy as such a stock due to the following factors:

  • SRE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $77.6 million.
  • SRE has traded 323,516 shares today.
  • SRE traded in a range 232.6% of the normal price range with a price range of $3.23.
  • SRE traded above its daily resistance level (quality: 529 days, meaning that the stock is crossing a resistance level set by the last 529 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 SRE:

Sempra Energy, through its subsidiaries, operates as an energy services company. The company's San Diego Gas & Electric Company segment generates, transmits, and distributes electricity; and distributes, transmits, and stores natural gas in California. The stock currently has a dividend yield of 2.5%. SRE has a PE ratio of 23.8. Currently there are 8 analysts that rate Sempra Energy a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Sempra Energy has been 918,800 shares per day over the past 30 days. Sempra Energy has a market cap of $25.6 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.35 and a short float of 1.3% with 3.87 days to cover. Shares are up 17.1% 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 Sempra Energy as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, notable return on equity, increase in net income and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • SEMPRA ENERGY has improved earnings per share by 10.2% 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, SEMPRA ENERGY increased its bottom line by earning $4.02 versus $3.49 in the prior year. This year, the market expects an improvement in earnings ($4.47 versus $4.02).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.2%. Since the same quarter one year prior, revenues slightly increased by 1.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Multi-Utilities industry average. The net income increased by 9.8% when compared to the same quarter one year prior, going from $246.00 million to $270.00 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Multi-Utilities industry and the overall market on the basis of return on equity, SEMPRA ENERGY has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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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