Strong On High Volume: VAALCO Energy (EGY)

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

  • EGY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.1 million.
  • EGY has traded 269,427 shares today.
  • EGY is trading at 3.71 times the normal volume for the stock at this time of day.
  • EGY is trading at a new high 3.09% 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 EGY:

VAALCO Energy, Inc., an independent energy company, acquires, explores for, develops, and produces crude oil and natural gas in the United States. Currently there is 1 analyst that rates VAALCO Energy a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for VAALCO Energy has been 1.3 million shares per day over the past 30 days. VAALCO Energy has a market cap of $123.6 million and is part of the basic materials sector and energy industry. The stock has a beta of 1.34 and a short float of 7.1% with 2.54 days to cover. Shares are down 57.5% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates VAALCO Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

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 454.4% when compared to the same quarter one year ago, falling from -$7.04 million to -$39.01 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, VAALCO ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for VAALCO ENERGY INC is rather low; currently it is at 16.06%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -213.85% is significantly below that of the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 72.33%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 458.33% compared to the year-earlier quarter. 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.
  • VAALCO ENERGY 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, VAALCO ENERGY INC swung to a loss, reporting -$1.34 versus $0.73 in the prior year. This year, the market expects an improvement in earnings ($0.23 versus -$1.34).

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