Targa Resources (TRGP) Strong On High Relative Volume Today

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 Targa Resources ( TRGP) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Targa Resources as such a stock due to the following factors:

  • TRGP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $56.9 million.
  • TRGP has traded 71,427 shares today.
  • TRGP is trading at 4.32 times the normal volume for the stock at this time of day.
  • TRGP is trading at a new high 3.09% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on TRGP:

Targa Resources Corp., through its general and limited partner interests in Targa Resources Partners LP, provides midstream natural gas and natural gas liquid (NGL) services in the United States. The company operates in two divisions, Gathering and Processing, and Logistics and Marketing. The stock currently has a dividend yield of 3.7%. TRGP has a PE ratio of 38. Currently there are 6 analysts that rate Targa Resources a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Targa Resources has been 654,400 shares per day over the past 30 days. Targa has a market cap of $5.1 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.74 and a short float of 2.1% with 1.73 days to cover. Shares are down 15.7% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Targa Resources as a buy. The company's strongest point has been its expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • Despite the weak revenue results, TRGP has outperformed against the industry average of 38.7%. Since the same quarter one year prior, revenues fell by 28.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • TARGA RESOURCES 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, TARGA RESOURCES CORP increased its bottom line by earning $2.44 versus $1.55 in the prior year. For the next year, the market is expecting a contraction of 5.9% in earnings ($2.30 versus $2.44).
  • The gross profit margin for TARGA RESOURCES CORP is rather low; currently it is at 15.37%. Regardless of TRGP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.19% trails the industry average.
  • Net operating cash flow has declined marginally to $292.60 million or 8.18% when compared to the same quarter last year. Despite a decrease in cash flow TARGA RESOURCES CORP is still fairing well by exceeding its industry average cash flow growth rate of -53.29%.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 27.81%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 85.10% compared to the year-earlier quarter. Although its share price is down sharply from a year ago and the fact that TRGP is still more expensive than most of the other companies in its industry based on its current price-to-earnings ratio, we believe that other strengths that the company offers support our buy rating.

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