Water-Logged And Getting Wetter: Agrium (AGU)

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 Agrium ( AGU) 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 Agrium as such a stock due to the following factors:

  • AGU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $44.9 million.
  • AGU has traded 175,427 shares today.
  • AGU traded in a range 206.5% of the normal price range with a price range of $1.98.
  • AGU traded below its daily resistance level (quality: 1 day, meaning that the stock is crossing a resistance level set by the last 1 calendar day. 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 AGU:

Agrium Inc. produces, retails, and distributes the crop nutrients, crop protection products, seeds, and agronomics primarily in North America, South America, Europe, and Australia. The company operates through two segments, Retail and Wholesale. The stock currently has a dividend yield of 3.3%. AGU has a PE ratio of 14.4. Currently there are 9 analysts that rate Agrium a buy, 2 analysts rate it a sell, and 10 rate it a hold.

The average volume for Agrium has been 544,000 shares per day over the past 30 days. Agrium has a market cap of $13.3 billion and is part of the basic materials sector and chemicals industry. Shares are up 0.7% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Agrium as a buy. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 121.97% to $788.00 million when compared to the same quarter last year. In addition, AGRIUM INC has also vastly surpassed the industry average cash flow growth rate of -14.28%.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The current debt-to-equity ratio, 0.53, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.45 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • AGU, with its decline in revenue, underperformed when compared the industry average of 8.5%. Since the same quarter one year prior, revenues slightly dropped by 2.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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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