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 $47.7 million.
  • AJG has traded 859,329 shares today.
  • AJG traded in a range 208.5% of the normal price range with a price range of $1.29.
  • AJG traded below its daily resistance level (quality: 58 days, meaning that the stock is crossing a resistance level set by the last 58 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.

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 3.4%. AJG has a PE ratio of 22. Currently there are 9 analysts that rate Arthur J Gallagher a buy, 2 analysts rate it a sell, and 4 rate it a hold.

The average volume for Arthur J Gallagher has been 1.1 million shares per day over the past 30 days. Arthur J Gallagher has a market cap of $7.7 billion and is part of the financial sector and insurance industry. The stock has a beta of 1.08 and a short float of 1.5% with 2.20 days to cover. Shares are down 7.8% year-to-date as of the close of trading on Friday.

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 revenue growth, increase in net income, good cash flow from operations, growth in earnings per share 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 15.8%. Since the same quarter one year prior, revenues rose by 12.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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 42.4% when compared to the same quarter one year prior, rising from $93.60 million to $133.30 million.
  • Net operating cash flow has significantly increased by 827.27% to $244.80 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 -13.53%.
  • ARTHUR J GALLAGHER & CO has improved earnings per share by 29.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in 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 ($2.55 versus $1.95).
  • AJG's debt-to-equity ratio of 0.66 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 1.03 is sturdy.

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.