Trade-Ideas LLC identified

Arthur J. Gallagher

(

AJG

) 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 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 $39.5 million.
  • AJG has traded 192,760 shares today.
  • AJG traded in a range 208.3% of the normal price range with a price range of $0.90.
  • AJG traded below its daily resistance level (quality: 21 days, meaning that the stock is crossing a resistance level set by the last 21 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 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 23. Currently there are 8 analysts that rate Arthur J. Gallagher a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Arthur J. Gallagher has been 1.7 million shares per day over the past 30 days. Arthur J. Gallagher has a market cap of $8.8 billion and is part of the financial sector and insurance industry. The stock has a beta of 1.16 and a short float of 1.7% with 3.96 days to cover. Shares are up 20.7% year-to-date as of the close of trading on Thursday.

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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 revenue growth, impressive record of earnings per share growth, compelling growth in net income, notable return on equity and largely solid financial position with reasonable debt levels by most measures. 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:

  • The revenue growth came in higher than the industry average of 14.2%. Since the same quarter one year prior, revenues slightly increased by 5.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ARTHUR J GALLAGHER & CO reported significant earnings per share improvement 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 year. We feel that this trend should continue. During the past fiscal year, ARTHUR J GALLAGHER & CO increased its bottom line by earning $2.04 versus $1.95 in the prior year. This year, the market expects an improvement in earnings ($2.80 versus $2.04).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Insurance industry. The net income increased by 112.3% when compared to the same quarter one year prior, rising from $21.90 million to $46.50 million.
  • 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. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, ARTHUR J GALLAGHER & CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • AJG's debt-to-equity ratio of 0.70 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 0.96 is weak.

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