Watch Out: Barbarians At The Gate For Hawaiian Electric Industries (HE)

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 Hawaiian Electric Industries ( HE) 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 Hawaiian Electric Industries as such a stock due to the following factors:

  • HE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $21.7 million.
  • HE has traded 737,680 shares today.
  • HE traded in a range 219.7% of the normal price range with a price range of $0.82.
  • HE traded above its daily resistance level (quality: 240 days, meaning that the stock is crossing a resistance level set by the last 240 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 HE:

Hawaiian Electric Industries, Inc., through its subsidiaries, is engaged in electric utility and banking businesses primarily in the State of Hawaii. The company is involved in the production, purchase, transmission, distribution, and sale of electricity. The stock currently has a dividend yield of 4.8%. HE has a PE ratio of 14.9. Currently there are 2 analysts that rate Hawaiian Electric Industries a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Hawaiian Electric Industries has been 833,400 shares per day over the past 30 days. Hawaiian Electric has a market cap of $2.6 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.30 and a short float of 20.5% with 28.28 days to cover. Shares are down 0.3% 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 Hawaiian Electric Industries as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, largely solid financial position with reasonable debt levels by most measures, increase in net income and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 5.4%. Since the same quarter one year prior, revenues slightly increased by 0.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • HAWAIIAN ELECTRIC INDS reported flat earnings per share in the most recent quarter. 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, HAWAIIAN ELECTRIC INDS increased its bottom line by earning $1.62 versus $1.43 in the prior year. This year, the market expects an improvement in earnings ($1.62 versus $1.62).
  • 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 Electric Utilities industry and the overall market on the basis of return on equity, HAWAIIAN ELECTRIC INDS has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Even though the current debt-to-equity ratio is 1.08, it is still below the industry average, suggesting that this level of debt is acceptable within the Electric Utilities industry.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Electric Utilities industry average, but is greater than that of the S&P 500. The net income increased by 2.0% when compared to the same quarter one year prior, going from $41.06 million to $41.89 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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