Axiall (AXLL) Marked As A Barbarian At The Gate

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 "barbarian at the gate" (strong stocks crossing above resistance 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 $32.6 million.
  • AXLL has traded 384,329 shares today.
  • AXLL traded in a range 229.2% of the normal price range with a price range of $2.50.
  • AXLL traded above its daily resistance level (quality: 37 days, meaning that the stock is crossing a resistance level set by the last 37 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' 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 positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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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 1.7%. AXLL has a PE ratio of 56. Currently there are 2 analysts that rate Axiall a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Axiall has been 1.0 million shares per day over the past 30 days. Axiall has a market cap of $2.6 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 1.60 and a short float of 2.5% with 2.07 days to cover. Shares are down 11.4% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Axiall as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 8.6% when compared to the same quarter one year prior, going from -$11.60 million to -$10.60 million.
  • The debt-to-equity ratio is somewhat low, currently at 0.60, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.29, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has increased to -$18.80 million or 13.76% when compared to the same quarter last year. Despite an increase in cash flow, AXIALL CORP's average is still marginally south of the industry average growth rate of 15.87%.
  • 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.
  • AXLL has underperformed the S&P 500 Index, declining 23.03% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

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