Trade-Ideas: Pattern Energy Group (PEGI) Is Today's Strong On High Relative 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.

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

  • PEGI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $13.1 million.
  • PEGI has traded 59,442 shares today.
  • PEGI is trading at 3.20 times the normal volume for the stock at this time of day.
  • PEGI is trading at a new high 3.12% 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 PEGI:

Pattern Energy Group Inc., an independent power company, owns and operates power projects in the United States, Canada, and Chile. As of March 2, 2015, the company owned interests in 12 wind power projects with the capacity of 1,636 megawatts. It sells electricity primarily to local utilities. The stock currently has a dividend yield of 4.7%. Currently there are 7 analysts that rate Pattern Energy Group a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Pattern Energy Group has been 634,300 shares per day over the past 30 days. Pattern Energy Group has a market cap of $2.0 billion and is part of the utilities sector and utilities industry. Shares are up 15.5% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Pattern Energy Group as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • PEGI's very impressive revenue growth greatly exceeded the industry average of 2.7%. Since the same quarter one year prior, revenues leaped by 90.1%. 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 significantly increased by 222.56% to $31.46 million when compared to the same quarter last year. In addition, PATTERN ENERGY GROUP INC has also vastly surpassed the industry average cash flow growth rate of -32.17%.
  • Compared to other companies in the Independent Power Producers & Energy Traders industry and the overall market, PATTERN ENERGY GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Independent Power Producers & Energy Traders industry. The net income has significantly decreased by 54.7% when compared to the same quarter one year ago, falling from -$13.18 million to -$20.39 million.
  • The debt-to-equity ratio is very high at 2.37 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, PEGI has a quick ratio of 0.57, this demonstrates the lack of ability of the company to cover short-term liquidity needs.

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