Trade-Ideas LLC identified

Targa Resources

(

TRGP

) as a weak on high relative volume 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 $75.4 million.
  • TRGP has traded 244,796 shares today.
  • TRGP is trading at 2.06 times the normal volume for the stock at this time of day.
  • TRGP is trading at a new low 5.05% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on TRGP:

TheStreet Recommends

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 16.2%. TRGP has a PE ratio of 15. Currently there are 4 analysts that rate Targa Resources a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for Targa Resources has been 2.2 million shares per day over the past 30 days. Targa has a market cap of $1.3 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 2.28 days to cover. Shares are down 12.6% year-to-date as of the close of trading on Thursday.

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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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