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.

Trade-Ideas LLC identified

Arthur J Gallagher

(

AJG

) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Arthur J Gallagher as such a stock due to the following factors:

  • AJG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $34.6 million.
  • AJG has traded 568,322 shares today.
  • AJG traded in a range 206.7% of the normal price range with a price range of $1.17.
  • AJG traded above its daily resistance level (quality: 135 days, meaning that the stock is crossing a resistance level set by the last 135 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' 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 positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in AJG with the Ticky from Trade-Ideas. See the FREE profile for AJG NOW at Trade-Ideas

More details on AJG:

Arthur J. Gallagher & Co., together with its subsidiaries, provides insurance brokerage and risk management services in the United States and internationally. It operates through three segments: Brokerage, Risk Management, and Corporate. The stock currently has a dividend yield of 3.1%. AJG has a PE ratio of 24.2. Currently there are 9 analysts that rate Arthur J Gallagher a buy, 2 analysts rate it a sell, and 2 rate it a hold.

The average volume for Arthur J Gallagher has been 832,200 shares per day over the past 30 days. Arthur J Gallagher has a market cap of $8.0 billion and is part of the financial sector and insurance industry. Shares are up 1.3% year-to-date as of the close of trading on Thursday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Arthur J Gallagher as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 3.0%. Since the same quarter one year prior, revenues rose by 40.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 137.16% to $169.10 million when compared to the same quarter last year. In addition, ARTHUR J GALLAGHER & CO has also vastly surpassed the industry average cash flow growth rate of 4.69%.
  • AJG's debt-to-equity ratio of 0.74 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.86 is weak.
  • ARTHUR J GALLAGHER & CO's earnings per share declined by 31.1% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, ARTHUR J GALLAGHER & CO reported lower earnings of $1.95 versus $2.07 in the prior year. This year, the market expects an improvement in earnings ($2.77 versus $1.95).
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and the Insurance industry average. The net income has decreased by 14.2% when compared to the same quarter one year ago, dropping from $60.00 million to $51.50 million.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

null