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Water-Logged And Getting Wetter: Ashland (ASH)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Ashland ( ASH) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Ashland as such a stock due to the following factors:

  • ASH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $52.6 million.
  • ASH has traded 207,410 shares today.
  • ASH traded in a range 222.2% of the normal price range with a price range of $2.77.
  • ASH traded below its daily resistance level (quality: 12 days, meaning that the stock is crossing a resistance level set by the last 12 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on ASH:

Ashland Inc., a specialty chemical company, provides specialty chemicals, technologies, and insights for customer needs worldwide. It operates through four segments: Ashland Specialty Ingredients, Ashland Water Technologies, Ashland Performance Materials, and Ashland Consumer Markets. The stock currently has a dividend yield of 1.5%. ASH has a PE ratio of 160.8. Currently there are 4 analysts that rate Ashland a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Ashland has been 641,700 shares per day over the past 30 days. Ashland has a market cap of $7.2 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 1.20 and a short float of 2.9% with 3.50 days to cover. Shares are up 15% year to date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ashland as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Compared to its closing price of one year ago, ASH's share price has jumped by 30.07%, exceeding the performance of the broader market during that same time frame. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • Net operating cash flow has significantly increased by 122.01% to $242.00 million when compared to the same quarter last year. In addition, ASHLAND INC has also vastly surpassed the industry average cash flow growth rate of -12.95%.
  • ASHLAND INC's earnings per share declined by 26.5% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, ASHLAND INC reported lower earnings of $0.42 versus $0.61 in the prior year. This year, the market expects an improvement in earnings ($6.11 versus $0.42).
  • ASH, with its decline in revenue, underperformed when compared the industry average of 6.5%. Since the same quarter one year prior, revenues slightly dropped by 3.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • ASH's debt-to-equity ratio of 0.83 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.04 is sturdy.

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