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Travelers Companies (TRV) Shows Signs Of Being Water-Logged And Getting Wetter

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 Travelers Companies ( TRV) 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 Travelers Companies as such a stock due to the following factors:

  • TRV has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $136.5 million.
  • TRV has traded 1.4 million shares today.
  • TRV traded in a range 206.8% of the normal price range with a price range of $1.73.
  • TRV traded below its daily resistance level (quality: 10 days, meaning that the stock is crossing a resistance level set by the last 10 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 TRV:

The Travelers Companies, Inc., through its subsidiaries, provides various commercial and personal property and casualty insurance products and services to businesses, government units, associations, and individuals primarily in the United States. The stock currently has a dividend yield of 2.3%. TRV has a PE ratio of 11.2. Currently there are 8 analysts that rate Travelers Companies a buy, no analysts rate it a sell, and 11 rate it a hold.

The average volume for Travelers Companies has been 1.9 million shares per day over the past 30 days. Travelers Companies has a market cap of $32.0 billion and is part of the financial sector and insurance industry. The stock has a beta of 1.06 and a short float of 1.4% with 3.25 days to cover. Shares are up 22.3% year to date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:

  • TRV's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • Compared to where it was 12 months ago, this stock has enjoyed a nice rise of 26.93% which was in line with the performance of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, TRV should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has slightly increased to $1,637.00 million or 9.06% when compared to the same quarter last year. In addition, TRAVELERS COS INC has also vastly surpassed the industry average cash flow growth rate of -63.49%.
  • TRAVELERS COS INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, TRAVELERS COS INC increased its bottom line by earning $6.27 versus $3.34 in the prior year. This year, the market expects an improvement in earnings ($8.88 versus $6.27).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, TRAVELERS COS INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

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