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

Aon

(

AON

) 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 Aon as such a stock due to the following factors:

  • AON has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $72.8 million.
  • AON has traded 501,071 shares today.
  • AON traded in a range 263.8% of the normal price range with a price range of $2.33.
  • AON traded below its daily resistance level (quality: 2 days, meaning that the stock is crossing a resistance level set by the last 2 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 AON:

Aon plc provides risk management services, insurance and reinsurance brokerage, and human resource consulting and outsourcing services worldwide. It operates through two segments, Risk Solutions and HR Solutions. The stock currently has a dividend yield of 1.2%. AON has a PE ratio of 21. Currently there are 5 analysts that rate Aon a buy, no analysts rate it a sell, and 11 rate it a hold.

The average volume for Aon has been 1.1 million shares per day over the past 30 days. Aon has a market cap of $28.7 billion and is part of the financial sector and insurance industry. The stock has a beta of 1.16 and a short float of 1.3% with 5.12 days to cover. Shares are up 7.5% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Aon as a

buy

. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, notable return on equity, good cash flow from operations, increase in net income and solid stock price performance. We feel its 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:

  • AON PLC has improved earnings per share by 7.5% in the most recent quarter compared to the same quarter a year ago. 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, AON PLC increased its bottom line by earning $4.67 versus $3.54 in the prior year. This year, the market expects an improvement in earnings ($6.13 versus $4.67).
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Insurance industry and the overall market, AON PLC's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • Net operating cash flow has significantly increased by 1336.36% to $136.00 million when compared to the same quarter last year. In addition, AON PLC has also vastly surpassed the industry average cash flow growth rate of 12.79%.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Insurance industry average. The net income increased by 0.9% when compared to the same quarter one year prior, going from $325.00 million to $328.00 million.

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