Energy Transfer Equity (ETE) Marked As A Barbarian At The Gate

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 Energy Transfer Equity ( ETE) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Energy Transfer Equity as such a stock due to the following factors:

  • ETE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $83.7 million.
  • ETE has traded 894,979 shares today.
  • ETE traded in a range 247.8% of the normal price range with a price range of $3.58.
  • ETE traded above its daily resistance level (quality: 2 days, meaning that the stock is crossing a resistance level set by the last 2 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on ETE:

Energy Transfer Equity, L.P., through its subsidiaries, provides diversified energy-related services in the Unites States. The stock currently has a dividend yield of 2.9%. ETE has a PE ratio of 58.1. Currently there are 7 analysts that rate Energy Transfer Equity a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Energy Transfer Equity has been 1.2 million shares per day over the past 30 days. Energy Transfer Equity has a market cap of $36.0 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.46 and a short float of 2% with 7.46 days to cover. Shares are up 16.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Energy Transfer Equity as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations, impressive record of earnings per share growth and compelling growth in net income. 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 greatly exceeded the industry average of 33.1%. Since the same quarter one year prior, revenues slightly increased by 5.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ENERGY TRANSFER EQUITY LP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ENERGY TRANSFER EQUITY LP increased its bottom line by earning $1.15 versus $0.31 in the prior year. This year, the market expects an improvement in earnings ($2.86 versus $1.15).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 165.7% when compared to the same quarter one year prior, rising from -$172.00 million to $113.00 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ENERGY TRANSFER EQUITY LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $668.00 million or 16.78% when compared to the same quarter last year. In addition, ENERGY TRANSFER EQUITY LP has also vastly surpassed the industry average cash flow growth rate of -42.26%.

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