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

ARC Document Solutions

(

ARC

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

  • ARC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.3 million.
  • ARC has traded 55,085 shares today.
  • ARC is trading at 6.37 times the normal volume for the stock at this time of day.
  • ARC is trading at a new low 7.11% 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 ARC:

ARC Document Solutions, Inc., a reprographics company, provides document solutions to various businesses. Currently there is 1 analyst that rates ARC Document Solutions a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for ARC Document Solutions has been 238,300 shares per day over the past 30 days. ARC Document has a market cap of $415.5 million and is part of the services sector and diversified services industry. The stock has a beta of 2.51 and a short float of 2.7% with 2.18 days to cover. Shares are up 9.5% year-to-date as of the close of trading on Monday.

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 ARC Document Solutions as a

hold

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.

Highlights from the ratings report include:

  • Powered by its strong earnings growth of 400.00% and other important driving factors, this stock has surged by 72.08% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • ARC DOCUMENT SOLUTIONS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ARC DOCUMENT SOLUTIONS INC continued to lose money by earning -$0.33 versus -$0.70 in the prior year. This year, the market expects an improvement in earnings ($0.25 versus -$0.33).
  • 42.43% is the gross profit margin for ARC DOCUMENT SOLUTIONS INC which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, ARC's net profit margin of 4.17% significantly trails the industry average.
  • 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 Commercial Services & Supplies industry and the overall market, ARC DOCUMENT SOLUTIONS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The debt-to-equity ratio is very high at 2.10 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, ARC's quick ratio is somewhat strong at 1.18, demonstrating the ability to handle short-term liquidity needs.

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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