Strong On High Volume: Sanchez Energy (SN)

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

  • SN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $60.4 million.
  • SN has traded 371,260 shares today.
  • SN is trading at 2.49 times the normal volume for the stock at this time of day.
  • SN 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 SN:

Sanchez Energy Corporation, an independent exploration and production company, focuses on the acquisition, exploration, and development of unconventional oil and natural gas resources in the onshore U.S. Gulf Coast. SN has a PE ratio of 16.6. Currently there are 7 analysts that rate Sanchez Energy a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Sanchez Energy has been 3.0 million shares per day over the past 30 days. Sanchez Energy has a market cap of $419.0 million and is part of the basic materials sector and energy industry. The stock has a beta of 0.89 and a short float of 24.4% with 1.79 days to cover. Shares are down 62.7% 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 Sanchez Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and generally high debt management risk.

Highlights from the ratings report include:
  • SN's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 69.79%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • 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. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 3.16, which shows the ability to cover short-term cash needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SANCHEZ ENERGY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for SANCHEZ ENERGY CORP is currently very high, coming in at 78.15%. Regardless of SN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SN's net profit margin of 23.64% significantly outperformed against the industry.
  • Net operating cash flow has significantly increased by 227.57% to $130.65 million when compared to the same quarter last year. In addition, SANCHEZ ENERGY CORP has also vastly surpassed the industry average cash flow growth rate of -1.58%.

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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