2 Energy Stocks Lighting Up On M&A News

Energy stocks PowerSecure International, Inc. (NYSE:POWR) and Dynegy Inc. (NYSE:DYN) are storming higher on M&A developments

by Josh Selway

Published on Feb 25, 2016 at 11:22 AM

While the broader stock market searches for direction, energy stocks PowerSecure International, Inc. (NYSE:POWR) and Dynegy Inc. (NYSE:DYN) are both scorching higher on M&A news -- similar to this hospitality stock. Let's take a closer look at what's driving POWR and DYN higher. 

POWR was last seen sporting a gain of 87% at $18.46, and earlier hit an annual high of $18.54, marking territory the stock hasn't seen since it's monumental bear gap from mid-2014. Sparking this explosive price action is news that the company will be bought by Southern Co (NYSE:SO) for $431 million, or $18.75 per share, in cash. 

On the analyst front, Craig-Hallum and Canaccord Genuity responded identically by lowering their opinions to "hold" from "buy," but raising their price targets to the $18.75 per-share purchase price. There are still plenty of bulls out there, though, as every other brokerage firm tracking PowerSecure International, Inc. (NYSE:POWR) considers it a "strong buy." 

DYN, meanwhile, is up 11.2% at $9.25, putting it on pace to close above its 10-day moving average for the first time since Feb. 5, after the company announced it's buying France-based Engie SA's U.S. fossil fuel business, which is valued at $3.3 billion. The upside move is likely refreshing for shareholders, as DYN has underperformed the S&P 500 Index (SPX) by almost 44 percentage points during the past three months, and earlier this week hit a record low of $7.20.

In the options pits, call buyers are probably cheering today's news, as well. Over the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Dynegy Inc. (NYSE:DYN) has accumulated a call/put volume ratio of 3.13. In other words, over three calls have been bought to open for every put

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