Axiall (AXLL) 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 Axiall ( AXLL) 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 Axiall as such a stock due to the following factors:

  • AXLL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $45.3 million.
  • AXLL has traded 1.4 million shares today.
  • AXLL traded in a range 205.1% of the normal price range with a price range of $2.95.
  • AXLL traded below its daily resistance level (quality: 6 days, meaning that the stock is crossing a resistance level set by the last 6 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 AXLL:

Axiall Corporation operates as an integrated chemicals and building products company in North America and Asia. The stock currently has a dividend yield of 1.6%. AXLL has a PE ratio of 16.1. Currently there are 3 analysts that rate Axiall a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Axiall has been 862,800 shares per day over the past 30 days. Axiall has a market cap of $2.9 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 3.07 and a short float of 2.7% with 1.50 days to cover. Shares are down 13.6% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Axiall as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 13.5%. Since the same quarter one year prior, revenues rose by 47.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 136.45% to $190.80 million when compared to the same quarter last year. In addition, AXIALL CORP has also vastly surpassed the industry average cash flow growth rate of 7.86%.
  • AXIALL CORP 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. 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, AXIALL CORP increased its bottom line by earning $3.44 versus $1.66 in the prior year. This year, the market expects an improvement in earnings ($3.62 versus $3.44).
  • Despite currently having a low debt-to-equity ratio of 0.59, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.36 is sturdy.

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