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Trade-Ideas LLC identified

American Capital Agency

(

AGNC

) 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 American Capital Agency as such a stock due to the following factors:

  • AGNC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $60.1 million.
  • AGNC has traded 2.1 million shares today.
  • AGNC traded in a range 243.9% of the normal price range with a price range of $0.58.
  • AGNC 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 AGNC:

TheStreet Recommends

American Capital Agency Corp. operates as a real estate investment trust (REIT) in the United States. The stock currently has a dividend yield of 12.5%. Currently there are 4 analysts that rate American Capital Agency a buy, 2 analysts rate it a sell, and 3 rate it a hold.

The average volume for American Capital Agency has been 2.9 million shares per day over the past 30 days. American Capital Agency has a market cap of $6.3 billion and is part of the financial sector and real estate industry. The stock has a beta of 0.08 and a short float of 2.1% with 2.15 days to cover. Shares are up 9.9% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates American Capital Agency as a

sell

. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 206.3% when compared to the same quarter one year ago, falling from -$252.00 million to -$772.00 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, AMERICAN CAPITAL AGENCY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of AMERICAN CAPITAL AGENCY CORP has not done very well: it is down 7.34% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The revenue fell significantly faster than the industry average of 11.8%. Since the same quarter one year prior, revenues fell by 30.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for AMERICAN CAPITAL AGENCY CORP is currently very high, coming in at 88.74%. Regardless of AGNC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AGNC's net profit margin of -263.48% significantly underperformed when compared to the industry average.

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