Trade-Ideas LLC identified

Targa Resources

(

TRGP

) as a "perilous reversal" (up big yesterday but down big today) 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 $78.7 million.
  • TRGP has traded 98,388 shares today.
  • TRGP is down 3.8% today.
  • TRGP was up 7.4% yesterday.

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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 17.8%. TRGP has a PE ratio of 13. Currently there are 4 analysts that rate Targa Resources a buy, no analysts rate it a sell, and 8 rate it a hold.

TST Recommends

The average volume for Targa Resources has been 2.0 million shares per day over the past 30 days. Targa has a market cap of $1.1 billion and is part of the basic materials sector and energy industry. The stock has a beta of 2.66 and a short float of 13.4% with 1.90 days to cover. Shares are down 23.3% year-to-date as of the close of trading on Monday.

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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 good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:

  • Net operating cash flow has significantly increased by 123.36% to $211.30 million when compared to the same quarter last year. In addition, TARGA RESOURCES CORP has also vastly surpassed the industry average cash flow growth rate of -26.59%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 36.5%. Since the same quarter one year prior, revenues fell by 28.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The debt-to-equity ratio is very high at 4.01 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, TRGP maintains a poor quick ratio of 0.84, which illustrates the inability to avoid short-term cash problems.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TARGA RESOURCES CORP's return on equity is below that of both the industry average and the S&P 500.

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