CenterPoint Energy (CNP) Highlighted As Storm The Castle 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 CenterPoint Energy ( CNP) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified CenterPoint Energy as such a stock due to the following factors:

  • CNP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $107.7 million.
  • CNP has traded 393,306 shares today.
  • CNP is trading at 1.69 times the normal volume for the stock at this time of day.
  • CNP crossed above its 200-day simple moving average.

'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. 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 on. 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 CNP:

CenterPoint Energy, Inc. operates as a public utility holding company in the United States. The stock currently has a dividend yield of 4%. CNP has a PE ratio of 18.7. Currently there are 5 analysts that rate CenterPoint Energy a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for CenterPoint Energy has been 4.5 million shares per day over the past 30 days. CenterPoint Energy has a market cap of $10.2 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.49 and a short float of 1.5% with 1.48 days to cover. Shares are up 2.5% 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 CenterPoint Energy as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, notable return on equity and increase in stock price during the past year. 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 came in higher than the industry average of 1.5%. Since the same quarter one year prior, revenues rose by 10.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $412.00 million or 20.46% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -4.14%.
  • 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 Multi-Utilities industry and the overall market on the basis of return on equity, CENTERPOINT ENERGY INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • CENTERPOINT ENERGY INC's earnings per share declined by 5.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, CENTERPOINT ENERGY INC reported lower earnings of $0.72 versus $0.96 in the prior year. This year, the market expects an improvement in earnings ($1.18 versus $0.72).
  • In its most recent trading session, CNP has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.

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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