Canadian Natural Resources (CNQ) Showing Signs Of Being A Roof Leaker

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 Canadian Natural Resources ( CNQ) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Canadian Natural Resources as such a stock due to the following factors:

  • CNQ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $117.0 million.
  • CNQ has traded 322,672 shares today.
  • CNQ is trading at 3.11 times the normal volume for the stock at this time of day.
  • CNQ crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on CNQ:

Canadian Natural Resources Limited explores for, develops, produces, markets, and sells crude oil, natural gas liquids (NGLs), and natural gas in North America. The stock currently has a dividend yield of 2.1%. CNQ has a PE ratio of 14.1. Currently there are 9 analysts that rate Canadian Natural Resources a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Canadian Natural Resources has been 2.2 million shares per day over the past 30 days. Canadian Natural has a market cap of $43.1 billion and is part of the basic materials sector and energy industry. Shares are up 17.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Canadian Natural Resources as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, attractive valuation levels, expanding profit margins and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 3.1%. Since the same quarter one year prior, revenues rose by 41.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 120.45% and other important driving factors, this stock has surged by 28.51% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CNQ should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The gross profit margin for CANADIAN NATURAL RESOURCES is rather high; currently it is at 53.98%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 19.92% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $2,457.00 million or 41.36% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -5.24%.

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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