Barbarian At The Gate: ONEOK Partners (OKS)

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 ONEOK Partners ( OKS) 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 ONEOK Partners as such a stock due to the following factors:

  • OKS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $39.5 million.
  • OKS has traded 121,429 shares today.
  • OKS traded in a range 301.2% of the normal price range with a price range of $3.62.
  • OKS traded above its daily resistance level (quality: 15 days, meaning that the stock is crossing a resistance level set by the last 15 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 OKS:

ONEOK Partners, L.P. engages in the gathering, processing, storage, and transportation of natural gas in the United States. It operates in three segments: Natural Gas Gathering and Processing; Natural Gas Liquids; and Natural Gas Pipelines. The stock currently has a dividend yield of 8.3%. OKS has a PE ratio of 22. Currently there are 4 analysts that rate ONEOK Partners a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for ONEOK Partners has been 841,800 shares per day over the past 30 days. ONEOK has a market cap of $6.9 billion and is part of the basic materials sector and energy industry. The stock has a beta of 0.49 and a short float of 4.7% with 8.11 days to cover. Shares are down 4.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates ONEOK Partners as a hold. Among the primary strengths of the company is its reasonable valuation levels, considering its current price compared to earnings, book value and other measures. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • OKS, with its decline in revenue, slightly underperformed the industry average of 37.8%. Since the same quarter one year prior, revenues fell by 42.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for ONEOK PARTNERS -LP is rather low; currently it is at 15.67%. Regardless of OKS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, OKS's net profit margin of 8.06% compares favorably to the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ONEOK PARTNERS -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 significantly decreased to $65.12 million or 85.81% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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