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Trade-Ideas: Herbalife (HLF) Is Today's Strong On High Relative Volume 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 or Stephanie Link.

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

  • HLF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $152.3 million.
  • HLF has traded 2.9 million shares today.
  • HLF is trading at 2.10 times the normal volume for the stock at this time of day.
  • HLF is trading at a new high 5.00% 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in HLF with the Ticky from Trade-Ideas. See the FREE profile for HLF NOW at Trade-Ideas

More details on HLF:

Herbalife Ltd., a network marketing company, sells weight management, healthy meals and snacks, sports and fitness, energy and targeted nutritional products, and personal care products worldwide. The stock currently has a dividend yield of 2.2%. HLF has a PE ratio of 12.7. Currently there are 6 analysts that rate Herbalife a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Herbalife has been 2.4 million shares per day over the past 30 days. Herbalife has a market cap of $5.6 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.18 and a short float of 45.5% with 12.30 days to cover. Shares are up 69.4% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Herbalife as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:

  • HLF's revenue growth has slightly outpaced the industry average of 7.7%. Since the same quarter one year prior, revenues rose by 16.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • HERBALIFE LTD has improved earnings per share by 25.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, HERBALIFE LTD increased its bottom line by earning $4.07 versus $3.32 in the prior year. This year, the market expects an improvement in earnings ($4.80 versus $4.07).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Personal Products industry and the overall market, HERBALIFE LTD's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 49.36% is the gross profit margin for HERBALIFE LTD which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 10.57% is above that of the industry average.
  • Net operating cash flow has increased to $137.63 million or 14.33% when compared to the same quarter last year. In addition, HERBALIFE LTD has also modestly surpassed the industry average cash flow growth rate of 7.98%.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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