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 AGCO ( AGCO) 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 AGCO as such a stock due to the following factors:

  • AGCO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $51.2 million.
  • AGCO has traded 1.2 million shares today.
  • AGCO traded in a range 276.7% of the normal price range with a price range of $2.66.
  • AGCO traded below its daily resistance level (quality: 39 days, meaning that the stock is crossing a resistance level set by the last 39 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 AGCO:

AGCO Corporation manufactures and distributes agricultural equipment and related replacement parts worldwide. The stock currently has a dividend yield of 0.9%. AGCO has a PE ratio of 14. Currently there is 1 analyst that rates AGCO a buy, 2 analysts rate it a sell, and 8 rate it a hold.

The average volume for AGCO has been 1.1 million shares per day over the past 30 days. AGCO has a market cap of $4.6 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.24 and a short float of 18.6% with 14.27 days to cover. Shares are up 14.5% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates AGCO as a buy. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • Net operating cash flow has increased to -$286.00 million or 44.03% when compared to the same quarter last year. In addition, AGCO CORP has also vastly surpassed the industry average cash flow growth rate of -13.13%.
  • The current debt-to-equity ratio, 0.49, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that AGCO's debt-to-equity ratio is low, the quick ratio, which is currently 0.66, displays a potential problem in covering short-term cash needs.
  • AGCO, with its decline in revenue, underperformed when compared the industry average of 15.4%. Since the same quarter one year prior, revenues fell by 27.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • In its most recent trading session, AGCO has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.

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