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

Capstone Turbine

(

CPST

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

  • CPST has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.5 million.
  • CPST has traded 767,400 shares today.
  • CPST is trading at 3.17 times the normal volume for the stock at this time of day.
  • CPST is trading at a new low 3.79% 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in CPST with the Ticky from Trade-Ideas. See the FREE profile for CPST NOW at Trade-Ideas

More details on CPST:

TheStreet Recommends

Capstone Turbine Corporation develops, manufactures, markets, and services microturbine technology solutions for use in stationary distributed power generation applications worldwide. Currently there are 4 analysts that rate Capstone Turbine a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Capstone Turbine has been 3.2 million shares per day over the past 30 days. Capstone Turbine has a market cap of $277.0 million and is part of the industrial goods sector and industrial industry. The stock has a beta of 0.64 and a short float of 15.5% with 11.28 days to cover. Shares are down 37% 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 Capstone Turbine as a

sell

. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • The gross profit margin for CAPSTONE TURBINE CORP is rather low; currently it is at 16.65%. Regardless of CPST's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CPST's net profit margin of -29.11% significantly underperformed when compared to the industry average.
  • CPST'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 34.38%, which is also worse than the performance of the S&P 500 Index. 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 company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Electrical Equipment industry average. The net income increased by 0.4% when compared to the same quarter one year prior, going from -$6.80 million to -$6.77 million.
  • 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 Electrical Equipment industry and the overall market, CAPSTONE TURBINE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.8%. Since the same quarter one year prior, revenues slightly dropped by 4.6%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

null