Trade-Ideas LLC identified

Assured Guaranty

(

AGO

) 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 Assured Guaranty as such a stock due to the following factors:

  • AGO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $37.5 million.
  • AGO has traded 2.0 million shares today.
  • AGO traded in a range 233.6% of the normal price range with a price range of $1.69.
  • AGO traded below its daily resistance level (quality: 15 days, meaning that the stock is crossing a resistance level set by the last 15 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 AGO:

Assured Guaranty Ltd., through its subsidiaries, provides credit protection products to public finance, infrastructure, and structured finance markets in the United States and internationally. The stock currently has a dividend yield of 1.7%. AGO has a PE ratio of 4. Currently there are 2 analysts that rate Assured Guaranty a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Assured Guaranty has been 1.5 million shares per day over the past 30 days. Assured Guaranty has a market cap of $4.0 billion and is part of the financial sector and insurance industry. The stock has a beta of 1.80 and a short float of 3.9% with 4.31 days to cover. Shares are up 7.9% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Assured Guaranty as a

buy

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Although AGO's debt-to-equity ratio of 0.22 is very low, it is currently higher than that of the industry average.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Insurance industry and the overall market, ASSURED GUARANTY LTD's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • The gross profit margin for ASSURED GUARANTY LTD is rather high; currently it is at 53.53%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, AGO's net profit margin of 35.05% significantly outperformed against the industry.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. 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.
  • AGO, with its decline in revenue, underperformed when compared the industry average of 17.7%. Since the same quarter one year prior, revenues fell by 32.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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