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Tickers in this Article: AAV, UPL, SWN, WLT, HFC, LUFK, DRQ
The market is currently down, with the Nasdaq declining 0.2%, the S&P 500 down 0.4% and the Dow slipping 0.6%. 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) is down 0.6%, underperforming the market overall. The current biggest movers in the sector are:
CompanyMarket CapPercentage Change
Advantage Oil (NYSE:AAV)2.3 million+11.3%
Ultra (NYSE:UPL).49 billion-4%
Southwestern Energy (NYSE:SWN).48 billion-3%
Walter Energy (NYSE:WLT).34 billion-2.8%
HollyFrontier (NYSE:HFC).1 billion-2.4%
Lufkin Industries (Nasdaq:LUFK).71 billion+2.4%
Dril-Quip (NYSE:DRQ).88 billion+2.3%
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Advantage Oil (NYSE:AAV) has soared 11.3% to reach a current price of $3.65 per share. The company's volume for the day so far is 337,624 shares. This is two times its average volume over the past three months. 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. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. AAV's capitalization ratio is 24.2%, which is relatively low. A low capitalization ratio can signify a failure to leverage equity into investment, missing valuable opportunities for growth and expansion. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.

Currently trading at $21.90 per share, Ultra (NYSE:UPL) has fallen 4%. At 1.2 million shares, the company's volume so far today is in line with the current daily average. If a stock price makes a big move up or down, volume lets us know the significance of that move. Valuation ratios like 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 are useful in determining how attractive a potential or existing investment is. One of the favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. UPL has a P/B ratio of 6.87 which shows that its share price is higher than its book value. It is important to take the company's debt into account when using the P/B ratio as debt can boost a company's liabilities to the point where they wipe out much of the book value of its hard assets, creating artificially high P/B values. A weakness of the P/B value ratio is that while the price component is easily determined by looking at the stock quote, the book value component is more difficult to estimate and more open to individual interpretation and analysis. SEE: How Buybacks Warps The Price-To-Book Ratio

Slipping 3%, Southwestern Energy (NYSE:SWN) is currently trading at $31.87 per share. So far today, the company's volume is 1.5 million shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Valuation ratios include 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. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. The P/S ratio for SWN is a high 4.03. This could be a good sign if the share price increases. A limitation of the P/S ratio is that the price component measures only stock market captialization, while sales are a function of the entire capital structure, potentially leading to wide differences between levered and unlevered companies.

Walter Energy (NYSE:WLT) is currently trading at a share price of $36.38, a 2.8% decline. So far today, the company's volume is 737,076 shares, lighter than yesterday's volume of 2.3 million shares. Volume is an important indicator because it indicates how significant a price shift is. In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. WLT has a debt ratio of 67.9%, which is on the high side. This might mean that the company now has low borrowing capacity, which reduces it's financial flexibility. 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.

At $38.81, HollyFrontier (NYSE:HFC) has slipped 2.4%. This morning, the company is trading a volume of 428,234 shares. This is 0.2 times the current three-month average. If a stock price moves on high volume, this means that the change is a significant one. While investment valuation ratios are useful tools in estimating the attractiveness of an investment, remember that it is important to look at a company's historical performance and compare the company ratios with its competitors and industry overall. The debt-equity (D/E) ratio is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. The debt-equity ratio of 24% is relatively low. Companies with low D/E ratios are more attractive to investors because they are better able to protect their business interests in times of decline. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

Lufkin Industries (Nasdaq:LUFK) has risen 2.4% and is currently trading at $52.07 per share. So far today, the company's volume is 166,800 shares, 0.3 times the current daily average. In technical analysis, trading volume is used to determine the strength of a market indicator. A company's investment value can be 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. 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. LUFK has a fairly low capitalization ratio of 29.3%. 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.

Dril-Quip (NYSE:DRQ) is at $73 per share after an increase of 2.3%. The company is currently trading a volume of 416,879 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The price/earnings to growth (PEG) ratio divides a company's P/E ratio by its growth rate of earnings-per-share. DRQ has a PEG ratio of 1.73, which is consistent with the industry average. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. 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.

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