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 Airgas as such a stock due to the following factors:
- ARG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $64.0 million.
- ARG has traded 533,860 shares today.
- ARG is trading at 1.55 times the normal volume for the stock at this time of day.
- ARG 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 ARG:
Airgas, Inc., together with its subsidiaries, supplies industrial, medical and specialty gases, and hard goods. The company operates through two segments, Distribution and All Other Operations. The stock currently has a dividend yield of 2%. ARG has a PE ratio of 23.1. Currently there are 7 analysts that rate Airgas a buy, 1 analyst rates it a sell, and 6 rate it a hold.
The average volume for Airgas has been 405,400 shares per day over the past 30 days. Airgas has a market cap of $8.1 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 0.68 and a short float of 4.1% with 3.45 days to cover. Shares are down 1.6% year-to-date as of the close of trading on Friday.
rates Airgas as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, expanding profit margins and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.0%. Since the same quarter one year prior, revenues slightly increased by 5.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- AIRGAS INC's earnings per share improvement from the most recent quarter was slightly positive. 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, AIRGAS INC increased its bottom line by earning $4.68 versus $4.36 in the prior year. This year, the market expects an improvement in earnings ($5.07 versus $4.68).
- 49.80% is the gross profit margin for AIRGAS INC which we consider to be strong. Regardless of ARG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.24% trails the industry average.
- The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Chemicals industry average. The net income increased by 3.5% when compared to the same quarter one year prior, going from $94.98 million to $98.31 million.
- In its most recent trading session, ARG has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- You can view the full Airgas Ratings Report.