Energy Stocks, Including Plains Exploration & Production, Making Big Moves on September 10, 2012

After the morning's trading, the Nasdaq has slipped 0.6%, the S&P 500 has been relatively flat and the Dow has increased 0.1%. The energy sector is the category of stocks that relate to producing or supplying energy. This sector includes companies involved in the exploration and development of oil or gas reserves, oil and gas drilling, or integrated power firms. Performance in the sector is largely driven by the supply and demand for worldwide energy. Energy producers will do very well during times of high oil and gas prices, but will earn less when the value of energy drops. Furthermore, this sector is sensitive to political events, which historically have driven changes in the price of oil.

The Energy sector (XLE) has risen 0.3% so far today and here are its biggest movers:

Company	Market Cap	Percentage Change
Plains Exploration & Production (NYSE:PXP)	$5.2 billion	-8.5%
Mcmoran (NYSE:MMR)	$2.16 billion	-5.6%
Cloud Peak Energy (NYSE:CLD)	$1.15 billion	-3.7%
Clayton Williams Energy (Nasdaq:CWEI)	$650.9 million	+3.3%
Holly Energy Partners (NYSE:HEP)	$2.03 billion	+2.6%
Atlas Pipeline Partners (NYSE:APL)	$1.93 billion	-2.3%
Lufkin Industries (Nasdaq:LUFK)	$1.84 billion	+2.3%

Broker Summary: E-Trade Financial

Plains Exploration & Production (NYSE:PXP) is currently trading at a share price of $36.91, a 8.5% decline. This morning, the company is trading a volume of 9.5 million shares. Volume is an important indicator because it indicates how significant a price shift is. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. The capitalization ratio for PXP is 54.1%, which is fairly high. The company may have trouble meeting operating and debt liabilities on time and surviving adverse economic conditions. This ratio is considered to be one of the more meaningful of the "debt" ratios - it delivers the key insight into the use of leverage by a company.



At $12.58, Mcmoran (NYSE:MMR) has slipped 5.6%. The company's volume is currently 1.5 million shares for the day,. Volume indicates the level of interest that investors have in a company at its current price. A wide array of ratios can be used by investors to estimate the attractiveness of a potential or existing investment and get an idea of its valuation. The price/book value ratio is calculated by dividing the current stock price by the company's book value per share. The P/B ratio for MMR is 2.17, indicating that the stock is trading for more than its book value. This may be a sign that the company is overvalued. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: Investment Valuation Ratios: Price/Book Value Ratio





Currently trading at $18.19 per share, Cloud Peak Energy (NYSE:CLD) has fallen 3.7%. The company's volume for the day so far is 488,645 shares. This is 0.8 times its current three-month average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Understanding investment valuation ratios allows an investor to assess the true value of an individual stock. The price/sales ratio measures a company's stock market price by its revenues. CLD has a low P/S ratio of 0.68. Coupled with high relative strength in the previous twelve months, a low P/S ratio is one of the most potent combinations of investment criteria. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.



Clayton Williams Energy (Nasdaq:CWEI) is at $55.30 per share after an increase of 3.3%. At 12,127 shares, the company's volume so far today is 0.3 times the average daily volume. Volume is an important indicator in technical analysis as it is used to measure the worth of a market move. If the markets have made a strong price move either up or down the perceived strength of that move depends on the volume for that period. The higher the volume during that price move the more significant the move. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The debt ratio is calculated by dividing total liabilities by total assets. CWEI has a debt ratio of 74.2%, which is on the high side. This means that the company's cash flow is significantly impacted by paying off principal and interest and that any negative change in performance or rise in interest rates could result in default. However, one thing to note with this ratio: it isn't a pure measure of a company's debt (or indebtedness), as it also includes operational liabilities, such as accounts payable and taxes payable.



Holly Energy Partners (NYSE:HEP) has risen 2.6% and is currently trading at $73.25 per share. The company's volume for the day so far is 26,120 shares. If a stock is trading on low volume, then there is not much interest in the stock. On the other hand, if a stock is trading on high volume, then there is a lot of interest in the stock. A company's value as an investment is more easily estimated using valuation ratios such as the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). HEP's P/E ratio of 26.4 falls below the industry average of 34.14. Companies with low P/E ratios may find it easier to surprise the market to the upside, even if their financial performance is not as strong as that of companies with high P/E ratios. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock





Atlas Pipeline Partners (NYSE:APL) is down 2.3% to reach $35.15 per share. This morning, 289,381 shares have been traded, whereas yesterday, volume was only 246,969 shares. Volume indicates the level of interest that investors have in a company at its current price. Investment valuation ratios can be very useful in determining the value of a stock, but it is very important to keep in mind that while some financial ratios have general rules (or a broad application), in most instances it is a prudent practice to look at a company's historical performance and use peer company/industry comparisons to put any given company's ratio in perspective. The debt-equity (D/E) ratio is a leverage ratio. The D/E ratio for APL is 56%. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.



Lufkin Industries (Nasdaq:LUFK) has moved up 2.3% and is currently trading at $56.13 per share. So far today, the company's volume is 268,803 shares. This is 0.7 times the current three-month average. The trading volume for a stock indicates the level of investor interest. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual stock. The capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. The capitalizion ratio of 29.3% is on the low end. Investors generally consider a company with low debt and high equity levels is a good quality investment. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.



The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.