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 $16.6 million.
  • TWOU has traded 80,031 shares today.
  • TWOU is trading at 2.32 times the normal volume for the stock at this time of day.
  • TWOU is trading at a new low 3.03% 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 668,100 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 down 17.4% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates 2U as a

sell

. The area that we feel has been the company's primary weakness has been its disappointing return on equity.

Highlights from the ratings report include:

  • 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 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.
  • The gross profit margin for 2U INC is currently very high, coming in at 79.77%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -7.86% is in-line with the industry average.
  • Net operating cash flow has significantly increased by 58.21% to $13.35 million when compared to the same quarter last year. In addition, 2U INC has also vastly surpassed the industry average cash flow growth rate of -39.80%.
  • TWOU has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.67, which clearly demonstrates the ability to cover short-term cash needs.
  • This stock has increased by 37.06% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in TWOU do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

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