During the recent trading sessions stock of Laredo Petroleum, Inc. (NYSE:LPI) was gathering the crowd in the stock market. At the end of the day, it’s only a stock’s performance that matters. With this in mind, it’s worth taking a look at the chart to get a sense of where it might be headed in the future.
How has the stock performed recently?
Laredo Petroleum, Inc. (NYSE:LPI) in the last month has decreased -13.72%. Shares are now up over the past year, outperforming the broad market by -100% and outperformed a peer group of similar companies by 356%. After the latest session, which saw the stock close at a price of $10.82, LPI sits below its 52-week high. Laredo Petroleum, Inc. (NYSE:LPI) has been trading in a bearish manner, based on the relative positions of the stock’s 20 and 200 day moving averages.
Of course, these surface-level price movements don’t tell us much about the direction that LPI may be headed in the future. Fortunately, there is way to use the speed and magnitude of these price changes to predict future performance, thanks to what are known as momentum indicators. As momentum slows, it might be a sign that a support or resistance level has been reached, and that a trend is about to reverse. Two such indicators are the RSI (Relative Strength Index) and the Stochastic %k Oscillator, which fluctuate on a scale of 0 to 100. A reading above 70 indicates that a stock is overvalued, and a reading below 30 implies that it is undervalued. The 20-day RSI for LPI is 41.86%, which suggests that the stock is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. The 20-day Stochastic %k measure, which sits at 29.83%, tells a different story, and suggests that LPI currently trades in oversold territory.
What do the trading volumes reveal?
Volume patterns are useful for gauging the level of conviction behind price changes, and can be used to make predictions about future price movements. A sudden increase in a stock’s activity can be a sign that investors are trading in anticipation of a catalyst, or that investors feel very strongly in one way or the other about the future direction of a stock. Laredo Petroleum, Inc. (LPI) average trading volume of 3,588,230 during the past month is 4.64% below its average volume over the past year, indicating that investors have been less active than usual in the stock in recent times.
What do the analysts think?
LPI is currently undervalued by -26.09% relative to the average 1-year price target of $14.64 taken from a group of Wall Street Analysts. The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 2.40, which implies that analysts are generally neutral in their outlook for LPI over the next year.
How risky is the stock?
In order to put LPI’s recent price performance into context, we need to get a sense of how the stock moves in relation to the overall market. Beta, which measures a stock’s price volatility relative to the market, provides the cleanest measure of systematic risk for a stock.
Laredo Petroleum, Inc. (NYSE:LPI) has a beta of 1.40, compared to a beta of 1 for the market, which implies that the stock’s price movements are more extreme than the market as a whole. LPI therefore has a above average level of market risk. During the past couple of weeks, LPI average daily volatility was 69.13%, which is -23.98 percentage points higher than the average volatility over the past 100 days.