Water-Logged And Getting Wetter Stock Of The Day: UGI (UGI)

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.

Trade-Ideas LLC identified UGI ( UGI) 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 UGI as such a stock due to the following factors:

  • UGI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $35.5 million.
  • UGI has traded 435,884 shares today.
  • UGI traded in a range 209.9% of the normal price range with a price range of $1.26.
  • UGI traded below its daily resistance level (quality: 4 days, meaning that the stock is crossing a resistance level set by the last 4 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 UGI:

UGI Corporation, through its subsidiaries, distributes, stores, transports, and markets energy products and related services in the United States and internationally. The stock currently has a dividend yield of 2.6%. UGI has a PE ratio of 24.9. Currently there are 2 analysts that rate UGI a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for UGI has been 1.2 million shares per day over the past 30 days. UGI has a market cap of $6.1 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.59 and a short float of 0.8% with 1.81 days to cover. Shares are down 7.6% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates UGI as a buy. Among the primary strengths of the company is its solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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. 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.
  • UGI, with its decline in revenue, slightly underperformed the industry average of 10.5%. Since the same quarter one year prior, revenues fell by 13.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • UGI 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, UGI CORP increased its bottom line by earning $1.94 versus $1.62 in the prior year. For the next year, the market is expecting a contraction of 1.6% in earnings ($1.91 versus $1.94).
  • 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 Gas Utilities industry. The net income has significantly decreased by 72.0% when compared to the same quarter one year ago, falling from $122.00 million to $34.10 million.
  • The debt-to-equity ratio of 1.49 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, UGI maintains a poor quick ratio of 0.72, which illustrates the inability to avoid short-term cash problems.

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