Watch Out: Barbarians At The Gate For EOG Resources (EOG)

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 EOG Resources ( EOG) 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 EOG Resources as such a stock due to the following factors:

  • EOG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $308.5 million.
  • EOG has traded 2.6 million shares today.
  • EOG traded in a range 237% of the normal price range with a price range of $3.66.
  • EOG traded above its daily resistance level (quality: 13 days, meaning that the stock is crossing a resistance level set by the last 13 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in EOG with the Ticky from Trade-Ideas. See the FREE profile for EOG NOW at Trade-Ideas

More details on EOG:

EOG Resources, Inc., together with its subsidiaries, explores for, develops, produces, and markets crude oil and natural gas. The stock currently has a dividend yield of 0.8%. EOG has a PE ratio of 23. Currently there are 15 analysts that rate EOG Resources a buy, 3 analysts rate it a sell, and 6 rate it a hold.

The average volume for EOG Resources has been 3.9 million shares per day over the past 30 days. EOG has a market cap of $48.9 billion and is part of the basic materials sector and energy industry. The stock has a beta of 0.48 and a short float of 1.5% with 2.47 days to cover. Shares are down 5.1% year-to-date as of the close of trading on Thursday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates EOG Resources as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.12, which illustrates the ability to avoid short-term cash problems.
  • The gross profit margin for EOG RESOURCES INC is rather high; currently it is at 68.25%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, EOG's net profit margin of -7.35% significantly underperformed when compared to the industry average.
  • EOG, with its decline in revenue, slightly underperformed the industry average of 38.6%. Since the same quarter one year prior, revenues fell by 43.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • EOG RESOURCES INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, EOG RESOURCES INC increased its bottom line by earning $5.32 versus $4.03 in the prior year. For the next year, the market is expecting a contraction of 96.0% in earnings ($0.21 versus $5.32).
  • The share price of EOG RESOURCES INC has not done very well: it is down 15.25% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it is one of the factors that makes this stock an attractive investment.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

More from Markets

Trump Takes Aim at Auto Imports; Markets End Mixed -- ICYMI

Trump Takes Aim at Auto Imports; Markets End Mixed -- ICYMI

Video: What Oprah's Content Partnership With Apple Means for the Rest of Tech

Video: What Oprah's Content Partnership With Apple Means for the Rest of Tech

REPLAY: Jim Cramer on the Markets, Oil, Starbucks, Tesla, Okta and Red Hat

REPLAY: Jim Cramer on the Markets, Oil, Starbucks, Tesla, Okta and Red Hat

Flashback Friday: The Market Movers

Flashback Friday: The Market Movers

OPEC Deal Doesn't Boost Production Enough to Drive Down Crude, Gasoline Prices

OPEC Deal Doesn't Boost Production Enough to Drive Down Crude, Gasoline Prices