Today's Weak On High Volume Stock: Tallgrass Energy Partners (TEP)

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 Tallgrass Energy Partners ( TEP) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Tallgrass Energy Partners as such a stock due to the following factors:

  • TEP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $6.2 million.
  • TEP has traded 104,160 shares today.
  • TEP is trading at 21.37 times the normal volume for the stock at this time of day.
  • TEP is trading at a new low 3.05% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of 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 (or avoid losses by trimming weak positions). 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 TEP:

Tallgrass Energy Partners, LP acquires, owns, develops, and operates various midstream energy assets in North America. The company operates in two segments, Gas Transportation and Storage, and Processing. The stock currently has a dividend yield of 4.2%. TEP has a PE ratio of 31.4. Currently there are 5 analysts that rate Tallgrass Energy Partners a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Tallgrass Energy Partners has been 155,200 shares per day over the past 30 days. Tallgrass Energy has a market cap of $1.3 billion and is part of the basic materials sector and energy industry. Shares are up 47.3% year-to-date as of the close of trading on Wednesday.

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 Tallgrass Energy Partners as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • Net operating cash flow has decreased to $12.29 million or 42.27% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The gross profit margin for TALLGRASS ENERGY PRT LP is rather low; currently it is at 24.07%. Regardless of TEP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, TEP's net profit margin of 12.72% compares favorably to the industry average.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TALLGRASS ENERGY PRT LP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The current debt-to-equity ratio, 0.55, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.04, which illustrates the ability to avoid short-term cash problems.
  • This stock has increased by 65.43% over the past year, outperforming the rise in the S&P 500 Index during the same period. Despite the fact that the stock's value has already enjoyed nice gains in the past year, we feel that the risks surrounding an investment in this stock outweigh any potential future returns.

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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