Storm The Castle: MarkWest Energy Partners (MWE)

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 MarkWest Energy Partners ( MWE) 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 MarkWest Energy Partners as such a stock due to the following factors:

  • MWE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $58.0 million.
  • MWE has traded 644,878 shares today.
  • MWE is trading at 1.53 times the normal volume for the stock at this time of day.
  • MWE 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 MWE:

MarkWest Energy Partners, L.P. engages in the gathering, processing, and transportation of natural gas. The company is also involved in the gathering, transportation, fractionation, storage, and marketing of natural gas liquids; and the gathering and transportation of crude oil. The stock currently has a dividend yield of 5.5%. MWE has a PE ratio of 11. Currently there are 4 analysts that rate MarkWest Energy Partners a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for MarkWest Energy Partners has been 851,000 shares per day over the past 30 days. MarkWest Energy has a market cap of $12.3 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.40 and a short float of 2.1% with 4.59 days to cover. Shares are down 2.2% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates MarkWest Energy Partners as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 37.8%. Since the same quarter one year prior, revenues rose by 18.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MARKWEST ENERGY PARTNERS 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 year. We feel that this trend should continue. During the past fiscal year, MARKWEST ENERGY PARTNERS LP increased its bottom line by earning $0.71 versus $0.21 in the prior year. This year, the market expects an improvement in earnings ($0.87 versus $0.71).
  • 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 633.2% when compared to the same quarter one year prior, rising from -$6.56 million to $34.98 million.
  • The gross profit margin for MARKWEST ENERGY PARTNERS LP is rather high; currently it is at 62.44%. It has increased significantly from the same period last year. Along with this, the net profit margin of 6.49% is above that of the industry average.
  • Net operating cash flow has significantly increased by 64.12% to $172.32 million when compared to the same quarter last year. In addition, MARKWEST ENERGY PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of -51.31%.

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