Trade-Ideas LLC identified

China Distance Education Holdings

(

DL

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

  • DL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.5 million.
  • DL has traded 55,532 shares today.
  • DL is trading at 6.90 times the normal volume for the stock at this time of day.
  • DL is trading at a new low 10.25% 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 DL:

China Distance Education Holdings Limited provides online and offline education services, and sells related products in the People's Republic of China. The stock currently has a dividend yield of 5.1%. DL has a PE ratio of 24. Currently there are 2 analysts that rate China Distance Education Holdings a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for China Distance Education Holdings has been 96,600 shares per day over the past 30 days. China Distance has a market cap of $557.5 million and is part of the services sector and diversified services industry. Shares are up 0.6% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates China Distance Education Holdings as a

buy

. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • The net income growth 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 increased by 0.7% when compared to the same quarter one year prior, going from $13.42 million to $13.52 million.
  • DL's revenue growth trails the industry average of 14.6%. Since the same quarter one year prior, revenues slightly increased by 0.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • DL's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, DL has a quick ratio of 1.73, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Diversified Consumer Services industry and the overall market, CHINA DISTANCE EDUCATION-ADR's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • CHINA DISTANCE EDUCATION-ADR reported flat earnings per share in the most recent quarter. 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, CHINA DISTANCE EDUCATION-ADR increased its bottom line by earning $0.69 versus $0.67 in the prior year. This year, the market expects an improvement in earnings ($0.87 versus $0.69).

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