Trade-Ideas: Affiliated Managers Group (AMG) 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 Affiliated Managers Group ( AMG) 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 Affiliated Managers Group as such a stock due to the following factors:

  • AMG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $78.7 million.
  • AMG has traded 337,625 shares today.
  • AMG traded in a range 208.8% of the normal price range with a price range of $6.81.
  • AMG traded below its daily resistance level (quality: 22 days, meaning that the stock is crossing a resistance level set by the last 22 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 AMG:

Affiliated Managers Group, Inc., through its affiliates, operates as an asset management company providing investment management services to mutual funds, institutional clients, and high net worth individuals in the United States. It provides advisory or subadvisory services to mutual funds. AMG has a PE ratio of 39.3. Currently there are 6 analysts that rate Affiliated Managers Group a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Affiliated Managers Group has been 430,200 shares per day over the past 30 days. Affiliated Managers Group has a market cap of $11.5 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.34 and a short float of 1% with 1.33 days to cover. Shares are down 6.9% 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 Affiliated Managers Group as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 0.8%. Since the same quarter one year prior, revenues rose by 16.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Capital Markets industry and the overall market, AFFILIATED MANAGERS GRP INC's return on equity exceeds that of both the industry average and the S&P 500.
  • AFFILIATED MANAGERS GRP INC has improved earnings per share by 34.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, AFFILIATED MANAGERS GRP INC increased its bottom line by earning $6.49 versus $3.27 in the prior year. This year, the market expects an improvement in earnings ($11.37 versus $6.49).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Capital Markets industry average. The net income increased by 38.7% when compared to the same quarter one year prior, rising from $75.20 million to $104.30 million.
  • Net operating cash flow has increased to $404.50 million or 43.03% when compared to the same quarter last year. In addition, AFFILIATED MANAGERS GRP INC has also vastly surpassed the industry average cash flow growth rate of -175.12%.

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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