NRG Energy (NRG) Is Today's Water-Logged And Getting Wetter Stock

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 NRG Energy ( NRG) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified NRG Energy as such a stock due to the following factors:

  • NRG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $80.4 million.
  • NRG has traded 5.2 million shares today.
  • NRG traded in a range 264% of the normal price range with a price range of $1.69.
  • NRG traded below its daily resistance level (quality: 34 days, meaning that the stock is crossing a resistance level set by the last 34 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' 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 negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on NRG:

NRG Energy, Inc., together with its subsidiaries, operates as a power and energy company. The company is engaged in the ownership and operation of power generation facilities. The stock currently has a dividend yield of 1.8%. Currently there are 8 analysts that rate NRG Energy a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for NRG Energy has been 4.1 million shares per day over the past 30 days. NRG Energy has a market cap of $10.6 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.80 and a short float of 4.1% with 3.66 days to cover. Shares are up 7.5% year-to-date as of the close of trading on Monday.

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 NRG Energy as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, solid stock price performance and growth in earnings per share. 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:
  • The revenue growth greatly exceeded the industry average of 0.1%. Since the same quarter one year prior, revenues rose by 30.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Independent Power Producers & Energy Traders industry. The net income increased by 41.2% when compared to the same quarter one year prior, rising from $119.00 million to $168.00 million.
  • NRG ENERGY INC has improved earnings per share by 33.3% 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, NRG ENERGY INC swung to a loss, reporting -$1.27 versus $2.21 in the prior year. This year, the market expects an improvement in earnings ($1.95 versus -$1.27).
  • Net operating cash flow has decreased to $744.00 million or 17.42% when compared to the same quarter last year. Despite a decrease in cash flow NRG ENERGY INC is still fairing well by exceeding its industry average cash flow growth rate of -42.47%.

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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