Trade-Ideas LLC identified

2U

(

TWOU

) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified 2U as such a stock due to the following factors:

  • TWOU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $30.2 million.
  • TWOU has traded 205,920 shares today.
  • TWOU is trading at 3.58 times the normal volume for the stock at this time of day.
  • TWOU is trading at a new low 3.00% 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.

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More details on TWOU:

2U, Inc. provides cloud-based software-as-a-service (SaaS) solutions for nonprofit colleges and universities to deliver education to qualified students. Currently there are 5 analysts that rate 2U a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for 2U has been 1.2 million shares per day over the past 30 days. 2U has a market cap of $1.0 billion and is part of the technology sector and computer software & services industry. Shares are up 25.4% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates 2U as a

sell

. Among the areas we feel are negative, one of the most important has been weak operating cash flow.

Highlights from the ratings report include:

  • Net operating cash flow has decreased to -$28.66 million or 31.67% when compared to the same quarter last year. Despite a decrease in cash flow of 31.67%, 2U INC is still significantly exceeding the industry average of -352.26%.
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Diversified Consumer Services industry average. The net income has decreased by 12.2% when compared to the same quarter one year ago, dropping from -$7.34 million to -$8.24 million.
  • 2U INC's earnings per share declined by 11.1% in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings (-$0.36 versus -$0.73).
  • Looking at where the stock is today compared to one year ago, we find that it is higher, and it has outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • Compared to other companies in the Diversified Consumer Services industry and the overall market, 2U INC's return on equity significantly trails that of both the industry average and the S&P 500.

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