Rosetta Resources (ROSE) Is Today's Strong On High Volume 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 Rosetta Resources ( ROSE) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Rosetta Resources as such a stock due to the following factors:

  • ROSE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $48.0 million.
  • ROSE has traded 258,875 shares today.
  • ROSE is trading at 4.74 times the normal volume for the stock at this time of day.
  • ROSE is trading at a new high 5.00% 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 ROSE:

Rosetta Resources Inc., an independent exploration and production company, is engaged in the acquisition and development of onshore energy resources in the United States. ROSE has a PE ratio of 7.3. Currently there are 8 analysts that rate Rosetta Resources a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Rosetta Resources has been 1.5 million shares per day over the past 30 days. Rosetta has a market cap of $1.1 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.90 and a short float of 11.8% with 2.55 days to cover. Shares are down 64.2% 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 Rosetta Resources as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • ROSE's very impressive revenue growth greatly exceeded the industry average of 6.3%. Since the same quarter one year prior, revenues leaped by 87.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ROSETTA RESOURCES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ROSETTA RESOURCES INC increased its bottom line by earning $3.43 versus $3.01 in the prior year. For the next year, the market is expecting a contraction of 26.8% in earnings ($2.51 versus $3.43).
  • The debt-to-equity ratio of 1.29 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, ROSE has a quick ratio of 0.51, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ROSETTA RESOURCES INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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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