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Trade-Ideas: Equinix (EQIX) Is Today's Weak 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 Equinix ( EQIX) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Equinix as such a stock due to the following factors:

  • EQIX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $192.8 million.
  • EQIX has traded 1.5 million shares today.
  • EQIX is trading at 17.24 times the normal volume for the stock at this time of day.
  • EQIX is trading at a new low 4.09% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of 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 (or avoid losses by trimming weak positions). 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 EQIX with the Ticky from Trade-Ideas. See the FREE profile for EQIX NOW at Trade-Ideas

More details on EQIX:

Equinix, Inc. provides data center services to protect and connect the information assets for the enterprises, financial services companies, and content and network providers primarily in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific. EQIX has a PE ratio of 72.7. Currently there are 14 analysts that rate Equinix a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Equinix has been 1.1 million shares per day over the past 30 days. Equinix has a market cap of $9.6 billion and is part of the technology sector and internet industry. The stock has a beta of 1.10 and a short float of 24.1% with 11.61 days to cover. Shares are down 5.8% year to date as of the close of trading on Tuesday.

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 Equinix as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels, expanding profit margins, increase in stock price during the past year and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 21.9%. Since the same quarter one year prior, revenues rose by 17.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • EQUINIX INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, EQUINIX INC increased its bottom line by earning $2.66 versus $1.71 in the prior year. This year, the market expects an improvement in earnings ($3.17 versus $2.66).
  • The gross profit margin for EQUINIX INC is currently very high, coming in at 70.70%. Regardless of EQIX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EQIX's net profit margin of 6.90% is significantly lower than the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

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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