Investors are Unsure How to React (Brief Analysis) – Jones Energy Inc (NYSE: JONE)

Wall Street stocks pulled back from records Thursday as concerns about a possible US government shutdown and lofty equity valuations dented sentiment.

The Dow Jones Industrial Average fell 0.4 per cent to finish the session at 26,017.81.

The broad-based S&P 500 lost 0.2 per cent at 2,798.03, while the tech-rich Nasdaq Composite Index slipped less than 0.1 per cent to 7,296.05.

General Electric had another bad day, falling 3.3 per cent following the news Tuesday that it was taking a US$6.2 billion charge linked to the insurance business. The conglomerate already was under heavy pressure because of weak performance in key industrial divisions.

Walmart advanced 1.6 per cent following an upgrade from Goldman Sachs, which praised the retail giant’s strategy and said it was likely to grant a “meaningful” dividend hike because of US tax reform.

Morgan Stanley rose 0.9 per cent after reporting that fourth-quarter earnings of 84 cents per share, seven cents above expectations. (Source: Business Times)

Top Pick for Friday: Jones Energy Inc (NYSE: JONE)

Jones Energy Inc (NYSE: JONE) has grabbed attention from the analysts when it experienced a change of 2.40% in the last trading session to close at $1.28. A total of 1,076,544 shares exchanged hands during the intra-day trade contrast with its average trading volume of 1.36M shares, while its relative volume stands at 0.79. Relative volume is the comparison of current volume to average volume for the same time of day, and it’s displayed as a ratio. If RVOL is less than 1 it is not In Play on this trading day and Investors may decide not to trade it.  If RVOL is above 2 it is In Play and this is more evidence Investors ought to be in the name.  When stocks are *very* In Play one can see a RVOL of 5 and above.  The higher the RVOL the more In Play the stock is.

Day traders strive to make money by exploiting minute price movements in individual assets (usually stocks, though currencies, futures, and options are traded as well), usually leveraging large amounts of capital to do so, therefore they trade on Stocks in Play. In Play Stocks are volatile enough to produce good risk and reward trading opportunities for both bull and bear traders intraday. Most company stocks have very little volatility. They generally move extremely slowly and they only produce big price swings when the company produces good or bad trading results, which may only happen a couple of times a year at best.

In deciding what to focus on – in a stock, say – a typical day trader looks for three things: liquidity, volatility and trading volume. Liquidity allows an investor to enter and exit a stock at a good price (i.e. tight spreads, or the difference between the bid and ask price of a stock, and low slippage, or the difference between the predictable price of a trade and the actual price). If a stock does not have good liquidity then it may take some time before a broker is able to negotiate a deal to buy or sell a stock and the broker may not be able to get the sell or buy price that the trader is looking for. This is a problem for day traders and it could mean the difference between a profitable and non-profitable trade.

Traders have different rules for what constitutes liquidity and a good guide is the volume of trades and volume of shares that are traded each day. 100,000 shares traded per day would be a minimum for most traders and some require 1,000,000.

Trading volume is a gauge of how many times a stock is bought and sold in a given time period (most commonly, within a day of trading, known as the average daily trading volume – ADTV). A high degree of volume indicates a lot of interest in a stock. Often, a boost in the volume of a stock is a harbinger of a price jump, either up or down.

Volatility is simply a measure of the predictable daily price range—the range in which a day trader operates. More volatility means greater profit or loss. After a recent check, Jones Energy Inc (NYSE: JONE) stock is found to be 9.24% volatile for the week, while 8.59% volatility is recorded for the month.

Technical’s Snapshot:

The stock has a market cap of $126.60M and the number of outstanding shares has been calculated 98.91M. Based on a recent bid, its distance from 20 days simple moving average is 17.80%, and its distance from 50 days simple moving average is 21.25% while it has a distance of -14.11% from the 200 days simple moving average. The company’s distance from 52-week high price is -72.44% and the current price is 74.62% away from 52-week low price. The company has Relative Strength Index (RSI 14) of 68.69 together with Average True Range (ATR 14) of 0.09.

Stock’s Valuation:

Past 5 years growth of JONE observed at -24.20%, and for the next five years the analysts that follow this company is expecting its growth at N/A. The stock’s price to sales ratio for trailing twelve months is 0.73 and price to book ratio for the most recent quarter is 0.27, whereas price to cash per share for the most recent quarter are 23.02. Its quick ratio for the most recent quarter is 0.60. Analysts mean recommendation for the stock is 2.80. This number is based on a 1 to 5 scale where 1 indicates a Strong Buy recommendation while 5 represents a Strong Sell.

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Robert Thomas has over 14 years experience in the financial services industry giving him a vast understanding of how news affects the financial markets. He is an active day trader spending the majority of her time analyzing earnings reports and watching commodities and derivatives. He has a Masters Degree in Economics from Westminster University with previous roles counting Investment Banking.