Water-Logged And Getting Wetter: Targa Resources Partners (NGLS)

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 Targa Resources Partners ( NGLS) 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 Targa Resources Partners as such a stock due to the following factors:

  • NGLS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $63.3 million.
  • NGLS has traded 693,644 shares today.
  • NGLS traded in a range 207% of the normal price range with a price range of $3.94.
  • NGLS traded below its daily resistance level (quality: 529 days, meaning that the stock is crossing a resistance level set by the last 529 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 NGLS:

Targa Resources Partners LP is engaged in the ownership, operation, acquisition, and development of midstream energy assets in the United States. The company operates through two divisions, Gathering and Processing, and Logistics and Marketing. The stock currently has a dividend yield of 6.2%. NGLS has a PE ratio of 17.7. Currently there are 6 analysts that rate Targa Resources Partners a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Targa Resources Partners has been 711,700 shares per day over the past 30 days. Targa has a market cap of $6.0 billion and is part of the basic materials sector and energy industry. The stock has a beta of 0.77 and a short float of 2.3% with 1.71 days to cover. Shares are up 0% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Targa Resources Partners as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels, good cash flow from operations, compelling growth in net income and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • NGLS's very impressive revenue growth greatly exceeded the industry average of 6.3%. Since the same quarter one year prior, revenues leaped by 56.1%. 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 Oil, Gas & Consumable Fuels industry. The net income increased by 115.1% when compared to the same quarter one year prior, rising from $59.70 million to $128.40 million.
  • Net operating cash flow has increased to $115.00 million or 15.57% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -1.72%.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, TARGA RESOURCES PARTNERS LP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

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