Strong On High Relative Volume: Legacy Reserves (LGCY)

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 Legacy Reserves ( LGCY) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Legacy Reserves as such a stock due to the following factors:

  • LGCY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $13.2 million.
  • LGCY has traded 141,325 shares today.
  • LGCY is trading at 2.69 times the normal volume for the stock at this time of day.
  • LGCY is trading at a new high 3.08% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on LGCY:

Legacy Reserves LP owns and operates oil and natural gas properties in the United States. The stock currently has a dividend yield of 12.6%. Currently there are 11 analysts that rate Legacy Reserves a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Legacy Reserves has been 538,400 shares per day over the past 30 days. Legacy Reserves has a market cap of $1.3 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.19 and a short float of 1% with 0.79 days to cover. Shares are down 30.2% 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 Legacy Reserves as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and increase in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • LGCY's very impressive revenue growth greatly exceeded the industry average of 6.4%. Since the same quarter one year prior, revenues leaped by 94.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for LEGACY RESERVES LP is rather high; currently it is at 66.93%. It has increased significantly from the same period last year. Along with this, the net profit margin of 31.02% significantly outperformed against the industry average.
  • LEGACY RESERVES LP reported significant earnings per share improvement 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, LEGACY RESERVES LP swung to a loss, reporting -$0.62 versus $1.43 in the prior year. This year, the market expects an improvement in earnings ($0.86 versus -$0.62).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, LEGACY RESERVES LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to $70.84 million or 9.90% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, LEGACY RESERVES LP has marginally lower results.

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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