Trade-Ideas: Steel Dynamics (STLD) Is Today's Strong On High Relative Volume Stock

Trade-Ideas LLC identified Steel Dynamics (STLD) as a strong on high relative volume candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Steel Dynamics

(

STLD

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

  • STLD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $106.8 million.
  • STLD has traded 399,929 shares today.
  • STLD is trading at 2.31 times the normal volume for the stock at this time of day.
  • STLD is trading at a new high 3.02% 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 STLD:

Steel Dynamics, Inc., together with its subsidiaries, manufactures and sells steel products; processes and sells recycled ferrous and nonferrous metals; and fabricates and sells steel joist and deck products in the United States and internationally. The stock currently has a dividend yield of 2.4%. Currently there are 11 analysts that rate Steel Dynamics a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Steel Dynamics has been 3.8 million shares per day over the past 30 days. Steel Dynamics has a market cap of $5.8 billion and is part of the basic materials sector and metals & mining industry. The stock has a beta of 1.30 and a short float of 4.6% with 2.52 days to cover. Shares are up 37.1% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Steel Dynamics as a

buy

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. 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.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 103.9% when compared to the same quarter one year prior, rising from $30.76 million to $62.74 million.
  • Net operating cash flow has increased to $288.90 million or 23.08% when compared to the same quarter last year. In addition, STEEL DYNAMICS INC has also modestly surpassed the industry average cash flow growth rate of 15.65%.
  • STLD's debt-to-equity ratio of 0.96 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that STLD's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.48 is high and demonstrates strong liquidity.
  • STEEL DYNAMICS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. 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, STEEL DYNAMICS INC swung to a loss, reporting -$0.53 versus $0.67 in the prior year. This year, the market expects an improvement in earnings ($1.89 versus -$0.53).

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