Enerplus (ERF) Flagged As Strong On High Volume

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

  • ERF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $8.5 million.
  • ERF has traded 164,031 shares today.
  • ERF is trading at 2.11 times the normal volume for the stock at this time of day.
  • ERF is trading at a new high 5.01% 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 ERF:

Enerplus Corporation, together with subsidiaries, engages in the exploration and development of crude oil and natural gas in the United States and Canada. The stock currently has a dividend yield of 5.5%. Currently there are 2 analysts that rate Enerplus a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Enerplus has been 1.1 million shares per day over the past 30 days. Enerplus has a market cap of $1.8 billion and is part of the basic materials sector and energy industry. Shares are down 6.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Enerplus as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 832.3% when compared to the same quarter one year ago, falling from $40.04 million to -$293.21 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ENERPLUS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to $131.10 million or 6.63% when compared to the same quarter last year. Despite a decrease in cash flow ENERPLUS CORP is still fairing well by exceeding its industry average cash flow growth rate of -53.19%.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 60.71%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 847.36% 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 could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • ENERPLUS CORP 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 not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, ENERPLUS CORP increased its bottom line by earning $1.43 versus $0.23 in the prior year.

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