Trade-Ideas LLC identified

Anglogold Ashanti

(

AU

) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Anglogold Ashanti as such a stock due to the following factors:

  • AU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $32.7 million.
  • AU has traded 76,209 shares today.
  • AU is up 3.3% today.
  • AU was down 8.4% yesterday.

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More details on AU:

AngloGold Ashanti Limited operates as a gold mining and exploration company. It also produces silver, uranium oxide, copper, molybdenum, and sulphur. The company has 20 operations and exploration projects in South Africa, Continental Africa, Australasia, and the Americas. Currently there are 4 analysts that rate Anglogold Ashanti a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Anglogold Ashanti has been 3.9 million shares per day over the past 30 days. Anglogold Ashanti has a market cap of $3.4 billion and is part of the basic materials sector and metals & mining industry. Shares are down 7.4% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Anglogold Ashanti as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • The debt-to-equity ratio of 1.42 is relatively high when compared with the industry average, suggesting a need for better debt level management.
  • Net operating cash flow has declined marginally to $323.00 million or 4.15% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • AU's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 34.89%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Metals & Mining industry average, but is less than that of the S&P 500. The net income has significantly decreased by 77.5% when compared to the same quarter one year ago, falling from -$80.00 million to -$142.00 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, ANGLOGOLD ASHANTI LTD underperformed against that of the industry average and is significantly less than that of the S&P 500.

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