Axiall (AXLL) Is Today's Water-Logged And Getting Wetter Stock

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 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 $36.1 million.
  • AXLL has traded 208,912 shares today.
  • AXLL traded in a range 248.6% of the normal price range with a price range of $2.62.
  • AXLL traded below its daily resistance level (quality: 139 days, meaning that the stock is crossing a resistance level set by the last 139 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 manufactures and markets chemicals and building products in the United States and internationally. The company operates through three segments: Chlorovinyls, Building Products, and Aromatics. The stock currently has a dividend yield of 1.6%. AXLL has a PE ratio of 63.2. Currently there is 1 analyst that rates Axiall a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Axiall has been 808,600 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 1.75 and a short float of 3.2% with 2.48 days to cover. Shares are down 3.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Axiall as a buy. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The current debt-to-equity ratio, 0.57, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.31, which illustrates the ability to avoid short-term cash problems.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 14.1%. Since the same quarter one year prior, revenues slightly dropped by 5.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, AXIALL CORP reported lower earnings of $0.64 versus $2.33 in the prior year. This year, the market expects an improvement in earnings ($2.56 versus $0.64).
  • Net operating cash flow has decreased to $129.60 million or 23.62% when compared to the same quarter last year. Despite a decrease in cash flow of 23.62%, AXIALL CORP is in line with the industry average cash flow growth rate of -24.91%.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Chemicals industry and the overall market, AXIALL CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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