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Trade-Ideas: Molycorp (MCP) Is Today's Pre-Market Mover With Heavy 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 Molycorp ( MCP) as a pre-market mover with heavy volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Molycorp as such a stock due to the following factors:

  • MCP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $39.2 million.
  • MCP traded 970,108 shares today in the pre-market hours as of 8:19 AM, representing 14.1% of its average daily volume.

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More details on MCP:

Molycorp, Inc. produces and sells rare earth and rare metal materials in the United States and internationally. Currently there is 1 analyst that rates Molycorp a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Molycorp has been 6.5 million shares per day over the past 30 days. Molycorp has a market cap of $1.4 billion and is part of the basic materials sector and metals & mining industry. The stock has a beta of 3.52 and a short float of 38.3% with 7.10 days to cover. Shares are down 22.8% 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 Molycorp as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself, deteriorating net income and generally high debt management risk.

Highlights from the ratings report include:

  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Metals & Mining industry and the overall market, MOLYCORP INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for MOLYCORP INC is currently extremely low, coming in at 0.05%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -52.00% is significantly below that of the industry average.
  • The debt-to-equity ratio of 1.00 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, MCP has managed to keep a strong quick ratio of 1.85, which demonstrates the ability to cover short-term cash needs.
  • MCP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 33.65%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The change in net income from the same quarter one year ago has exceeded that of the Metals & Mining industry average, but is less than that of the S&P 500. The net income has decreased by 5.3% when compared to the same quarter one year ago, dropping from -$67.60 million to -$71.18 million.

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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