Tallgrass Energy Partners (TEP) Highlighted As Strong And Under The Radar Stock Of The Day

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.

Trade-Ideas LLC identified Tallgrass Energy Partners ( TEP) as a strong and under the radar 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 $7.0 million.
  • TEP is making at least a new 3-day high.
  • TEP has a PE ratio of 36.0.
  • TEP is mentioned 1.32 times per day on StockTwits.
  • TEP has not yet been mentioned on StockTwits today.
  • TEP is currently in the upper 20% of its 1-year range.
  • TEP is in the upper 35% of its 20-day range.
  • TEP is in the upper 45% of its 5-day range.
  • TEP is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

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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 through three segments: Natural Gas Transportation & Logistics; Crude Oil Transportation & Logistics; and Processing & Logistics. The stock currently has a dividend yield of 4.2%. TEP has a PE ratio of 36.0. Currently there are 3 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 338,600 shares per day over the past 30 days. Tallgrass Energy has a market cap of $2.4 billion and is part of the basic materials sector and energy industry. Shares are up 9.6% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Tallgrass Energy Partners as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 20.3%. Since the same quarter one year prior, revenues rose by 26.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.54, 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 1.21, which illustrates the ability to avoid short-term cash problems.
  • Powered by its strong earnings growth of 60.60% and other important driving factors, this stock has surged by 37.78% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • 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.
  • Net operating cash flow has declined marginally to $32.20 million or 1.64% when compared to the same quarter last year. Despite a decrease in cash flow TALLGRASS ENERGY PRT LP is still fairing well by exceeding its industry average cash flow growth rate of -13.13%.

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