Allegheny Technologies (ATI) Shows Signs Of Being Water-Logged And Getting Wetter

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 Allegheny Technologies ( ATI) 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 Allegheny Technologies as such a stock due to the following factors:

  • ATI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $39.5 million.
  • ATI has traded 355,359 shares today.
  • ATI traded in a range 203.3% of the normal price range with a price range of $1.57.
  • ATI traded below its daily resistance level (quality: 32 days, meaning that the stock is crossing a resistance level set by the last 32 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 ATI:

Allegheny Technologies Incorporated engages in the production and sale of specialty metals worldwide. It operates in three segments: High Performance Metals, Flat-Rolled Products, and Engineered Products. The stock currently has a dividend yield of 2%. ATI has a PE ratio of 453.8. Currently there are 3 analysts that rate Allegheny Technologies a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Allegheny Technologies has been 1.1 million shares per day over the past 30 days. Allegheny has a market cap of $3.9 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 2.16 and a short float of 7.5% with 6.78 days to cover. Shares are down 4.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • ATI, with its decline in revenue, underperformed when compared the industry average of 3.9%. Since the same quarter one year prior, revenues fell by 14.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • ALLEGHENY TECHNOLOGIES INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, ALLEGHENY TECHNOLOGIES INC reported lower earnings of $1.31 versus $1.98 in the prior year. For the next year, the market is expecting a contraction of 126.9% in earnings (-$0.35 versus $1.31).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 195.8% when compared to the same quarter one year ago, falling from $35.30 million to -$33.80 million.

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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