Trade-Ideas: Targa Resources (TRGP) Is Today's Weak On High Relative Volume Stock

Trade-Ideas LLC identified Targa Resources (TRGP) as a weak on high relative volume candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Targa Resources

(

TRGP

) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Targa Resources as such a stock due to the following factors:

  • TRGP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $73.2 million.
  • TRGP has traded 178,069 shares today.
  • TRGP is trading at 3.47 times the normal volume for the stock at this time of day.
  • TRGP is trading at a new low 4.04% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on TRGP:

Targa Resources Corp., through its general and limited partner interests in Targa Resources Partners LP, provides midstream natural gas and natural gas liquid (NGL) services in the United States. The company operates in two divisions, Gathering and Processing, and Logistics and Marketing. The stock currently has a dividend yield of 8.4%. TRGP has a PE ratio of 45. Currently there are 3 analysts that rate Targa Resources a buy, no analysts rate it a sell, and 11 rate it a hold.

The average volume for Targa Resources has been 2.4 million shares per day over the past 30 days. Targa has a market cap of $6.9 billion and is part of the basic materials sector and energy industry. The stock has a beta of 2.40 and a short float of 5.9% with 4.65 days to cover. Shares are up 52.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Targa Resources as a

hold

. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:

  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 23.9%. Since the same quarter one year prior, revenues fell by 14.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • TRGP's debt-to-equity ratio of 0.89 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 0.78 is weak.
  • TARGA RESOURCES CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, TARGA RESOURCES CORP reported lower earnings of $1.05 versus $2.44 in the prior year. For the next year, the market is expecting a contraction of 107.1% in earnings (-$0.08 versus $1.05).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 184.4% when compared to the same quarter one year ago, falling from $3.20 million to -$2.70 million.

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