Trade-Ideas: Golar LNG (GLNG) 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 Golar LNG ( GLNG) 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 Golar LNG as such a stock due to the following factors:

  • GLNG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $101.3 million.
  • GLNG has traded 405,197 shares today.
  • GLNG is trading at 2.03 times the normal volume for the stock at this time of day.
  • GLNG 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 GLNG:

Golar LNG Limited, a midstream liquefied natural gas (LNG) company, is engaged in the transportation, regasification and liquefaction, and trading of LNG. The company operates in two segments, Vessel Operations and Commodity Trading. The stock currently has a dividend yield of 4.8%. GLNG has a PE ratio of 23.7. Currently there are 5 analysts that rate Golar LNG a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Golar LNG has been 1.5 million shares per day over the past 30 days. Golar LNG has a market cap of $3.5 billion and is part of the services sector and transportation industry. Shares are up 3.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Golar LNG 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 good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • GLNG's very impressive revenue growth greatly exceeded the industry average of 33.1%. Since the same quarter one year prior, revenues leaped by 78.5%. 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.
  • The debt-to-equity ratio is somewhat low, currently at 0.60, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
  • 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 981.4% when compared to the same quarter one year ago, falling from $4.31 million to -$38.00 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, GOLAR LNG LTD's return on equity significantly trails that of both the industry average and the S&P 500.

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