Trade-Ideas: Superior Energy Services (SPN) Is Today's

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 Superior Energy Services ( SPN) 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 Superior Energy Services as such a stock due to the following factors:

  • SPN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $74.0 million.
  • SPN has traded 2.9 million shares today.
  • SPN is trading at 2.15 times the normal volume for the stock at this time of day.
  • SPN 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 SPN:

Superior Energy Services, Inc. provides specialized oilfield services and equipment to oil and gas companies in the United States, the Gulf of Mexico, and internationally. The stock currently has a dividend yield of 1.3%. SPN has a PE ratio of 14.0. Currently there are 11 analysts that rate Superior Energy Services a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Superior Energy Services has been 3.2 million shares per day over the past 30 days. Superior Energy Services has a market cap of $3.8 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.58 and a short float of 4.6% with 2.73 days to cover. Shares are up 24.6% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Superior Energy Services as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and compelling growth in net income. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 2.6%. Since the same quarter one year prior, revenues slightly increased by 9.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, SPN has a quick ratio of 1.85, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 39.65% is the gross profit margin for SUPERIOR ENERGY SERVICES INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 5.61% trails 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 Energy Equipment & Services industry and the overall market, SUPERIOR ENERGY SERVICES INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • SPN'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 25.92%, 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

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