Perilous Reversal Stock: TC Pipelines (TCP)

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 TC Pipelines ( TCP) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified TC Pipelines as such a stock due to the following factors:

  • TCP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $12.9 million.
  • TCP has traded 190,215 shares today.
  • TCP is down 5.9% today.
  • TCP was up 15.4% yesterday.

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More details on TCP:

TC PipeLines, LP acquires, owns, and participates in the management of energy infrastructure businesses in North America. The stock currently has a dividend yield of 5.7%. TCP has a PE ratio of 21.9. Currently there is 1 analyst that rates TC Pipelines a buy, 3 analysts rate it a sell, and 4 rate it a hold.

The average volume for TC Pipelines has been 127,400 shares per day over the past 30 days. TC Pipelines has a market cap of $3.7 billion and is part of the basic materials sector and energy industry. The stock has a beta of 0.48 and a short float of 2.9% with 4.87 days to cover. Shares are up 40.7% 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 TC Pipelines as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, expanding profit margins, good cash flow from operations, growth in earnings per share and increase in net income. 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:
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. 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.
  • The gross profit margin for TC PIPELINES LP is currently very high, coming in at 78.05%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 45.12% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 266.66% to $88.00 million when compared to the same quarter last year. In addition, TC PIPELINES LP has also vastly surpassed the industry average cash flow growth rate of -5.24%.
  • Despite the stagnant revenue growth, the company outperformed against the industry average of 3.1%. Since the same quarter one year prior, revenues have remained constant. The stagnant revenue growth has not kept the company from increasing earnings per share.
  • TC PIPELINES LP has improved earnings per share by 45.0% 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, TC PIPELINES LP reported lower earnings of $2.13 versus $3.27 in the prior year. This year, the market expects an improvement in earnings ($2.70 versus $2.13).

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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