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
) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Allergan as such a stock due to the following factors:
- AGN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $224.5 million.
- AGN has traded 21,308 shares today.
- AGN is trading at 1.75 times the normal volume for the stock at this time of day.
- AGN crossed below its 200-day simple moving average.
'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.
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More details on AGN:
Allergan, Inc. operates as a multi-specialty healthcare company primarily in the United States, Europe, Latin America, and the Asia Pacific. The stock currently has a dividend yield of 0.2%. AGN has a PE ratio of 23.3. Currently there are 9 analysts that rate Allergan a buy, no analysts rate it a sell, and 10 rate it a hold.
The average volume for Allergan has been 2.1 million shares per day over the past 30 days. Allergan has a market cap of $29.3 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.66 and a short float of 1% with 1.25 days to cover. Shares are up 7.5% year to date as of the close of trading on Monday.
rates Allergan as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, increase in net income and increase in stock price during the past year. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 2.5%. Since the same quarter one year prior, revenues rose by 13.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.43, which clearly demonstrates the ability to cover short-term cash needs.
- ALLERGAN INC has improved earnings per share by 34.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ALLERGAN INC increased its bottom line by earning $3.57 versus $3.01 in the prior year. This year, the market expects an improvement in earnings ($4.76 versus $3.57).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Pharmaceuticals industry average. The net income increased by 20.2% when compared to the same quarter one year prior, going from $249.40 million to $299.80 million.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full Allergan Ratings Report.