Trade-Ideas: Assured Guaranty (AGO) Is Today's

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 or Stephanie Link.

Trade-Ideas LLC identified Assured Guaranty ( AGO) 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 Assured Guaranty as such a stock due to the following factors:

  • AGO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $52.1 million.
  • AGO has traded 1.3 million shares today.
  • AGO traded in a range 215% of the normal price range with a price range of $1.23.
  • AGO traded above its daily resistance level (quality: 30 days, meaning that the stock is crossing a resistance level set by the last 30 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.

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More details on AGO:

Assured Guaranty Ltd., through its subsidiaries, provides credit protection products to public finance, infrastructure, and structured finance markets in the United States and internationally. The stock currently has a dividend yield of 2.1%. AGO has a PE ratio of 12.5. Currently there are 2 analysts that rate Assured Guaranty a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Assured Guaranty has been 1.8 million shares per day over the past 30 days. Assured Guaranty has a market cap of $3.5 billion and is part of the financial sector and insurance industry. The stock has a beta of 1.99 and a short float of 1.2% with 0.87 days to cover. Shares are up 35.1% year to date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Assured Guaranty as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, AGO's share price has jumped by 34.30%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • AGO's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • The gross profit margin for ASSURED GUARANTY LTD is currently very high, coming in at 75.43%. Regardless of AGO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AGO's net profit margin of 46.79% significantly outperformed against the industry.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Insurance industry. The net income has significantly decreased by 41.9% when compared to the same quarter one year ago, falling from $377.00 million to $219.00 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Insurance industry and the overall market, ASSURED GUARANTY LTD's return on equity is below that of both the industry average and the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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