Strong On High Relative Volume: WPX Energy (WPX)

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

  • WPX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $44.6 million.
  • WPX has traded 332,043 shares today.
  • WPX is trading at 2.06 times the normal volume for the stock at this time of day.
  • WPX is trading at a new high 3.02% 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 WPX:

WPX Energy, Inc., an independent natural gas and oil exploration and production company, engages in the exploitation and development of unconventional properties in the United States. WPX has a PE ratio of 18. Currently there are 5 analysts that rate WPX Energy a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for WPX Energy has been 4.8 million shares per day over the past 30 days. WPX Energy has a market cap of $2.7 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.39 and a short float of 6.7% with 3.75 days to cover. Shares are up 8.2% year-to-date as of the close of trading on Thursday.

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TheStreet Quant Ratings rates WPX Energy as a sell. Among the areas we feel are negative, one of the most important has been weak operating cash flow.

Highlights from the ratings report include:
  • Net operating cash flow has declined marginally to $194.00 million or 5.82% when compared to the same quarter last year. Despite a decrease in cash flow WPX ENERGY INC is still fairing well by exceeding its industry average cash flow growth rate of -53.17%.
  • 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, WPX ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • This stock's share value has moved by only 40.25% over the past year. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • WPX ENERGY INC has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, WPX ENERGY INC turned its bottom line around by earning $0.62 versus -$5.43 in the prior year. For the next year, the market is expecting a contraction of 124.2% in earnings (-$0.15 versus $0.62).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 38.6%. Since the same quarter one year prior, revenues fell by 36.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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