3 Stocks Driving The Energy Industry Higher

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.

All three major indices are trading down today with the Dow Jones Industrial Average ( ^DJI) trading down 41.93 points (-0.2%) at 17,071 as of Monday, Sept. 29, 2014, 4:20 PM ET. The NYSE advances/declines ratio sits at 1,274 issues advancing vs. 1,814 declining with 136 unchanged.

The Energy industry as a whole closed the day up 0.2% versus the S&P 500, which was down 0.3%. Top gainers within the Energy industry included Sonde Resources ( SOQ), up 7.7%, PostRock Energy ( PSTR), up 1.8%, Houston American Energy ( HUSA), up 1.7%, Zion Oil & Gas ( ZN), up 1.9% and Superior Drilling Products ( SDPI), up 3.4%.

TheStreet Ratings Group would like to highlight 3 stocks pushing the industry higher today:

Houston American Energy ( HUSA) is one of the companies that pushed the Energy industry higher today. Houston American Energy was up $0.01 (1.7%) to $0.31 on light volume. Throughout the day, 57,510 shares of Houston American Energy exchanged hands as compared to its average daily volume of 211,100 shares. The stock ranged in a price between $0.30-$0.32 after having opened the day at $0.30 as compared to the previous trading day's close of $0.30.

Houston American Energy Corp., an independent energy company, explores for, develops, and produces natural gas, crude oil, and condensate from properties located principally in the Gulf Coast area of the United States and South America. Houston American Energy has a market cap of $16.2 million and is part of the basic materials sector. Shares are up 21.9% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate Houston American Energy a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Houston American Energy as a sell. Among the areas we feel are negative, one of the most important has been weak operating cash flow.

Highlights from TheStreet Ratings analysis on HUSA go as follows:

  • Net operating cash flow has significantly decreased to -$0.42 million or 135.29% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, HOUSTON AMERN ENERGY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • In its most recent trading session, HUSA has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • The gross profit margin for HOUSTON AMERN ENERGY CORP is rather high; currently it is at 67.16%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -1020.89% is in-line with the industry average.
  • HUSA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 53.71, which clearly demonstrates the ability to cover short-term cash needs.

You can view the full analysis from the report here: Houston American Energy Ratings Report

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At the close, PostRock Energy ( PSTR) was up $0.02 (1.8%) to $1.13 on light volume. Throughout the day, 5,492 shares of PostRock Energy exchanged hands as compared to its average daily volume of 28,000 shares. The stock ranged in a price between $1.11-$1.13 after having opened the day at $1.11 as compared to the previous trading day's close of $1.11.

PostRock Energy Corporation, an independent oil and gas company, is engaged in the acquisition, exploration, development, production, and gathering of crude oil and natural gas. PostRock Energy has a market cap of $34.2 million and is part of the basic materials sector. Shares are down 4.3% year-to-date as of the close of trading on Friday. Currently there are no analysts who rate PostRock Energy a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates PostRock Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally high debt management risk and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on PSTR go as follows:

  • 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 187.0% when compared to the same quarter one year ago, falling from $6.88 million to -$5.99 million.
  • Currently the debt-to-equity ratio of 1.62 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.43, which clearly demonstrates the inability to cover short-term cash needs.
  • The share price of POSTROCK ENERGY CORP has not done very well: it is down 9.02% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, POSTROCK ENERGY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • POSTROCK ENERGY 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, POSTROCK ENERGY CORP continued to lose money by earning -$0.93 versus -$3.99 in the prior year. This year, the market expects an improvement in earnings (-$0.78 versus -$0.93).

You can view the full analysis from the report here: PostRock Energy Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Sonde Resources ( SOQ) was another company that pushed the Energy industry higher today. Sonde Resources was up $0.01 (7.7%) to $0.14 on light volume. Throughout the day, 2,684 shares of Sonde Resources exchanged hands as compared to its average daily volume of 35,100 shares. The stock ranged in a price between $0.13-$0.14 after having opened the day at $0.14 as compared to the previous trading day's close of $0.13.

Sonde Resources has a market cap of $7.3 million and is part of the basic materials sector. Shares are down 81.2% year-to-date as of the close of trading on Friday.

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.

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