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.

Trade-Ideas LLC identified

China Finance Online

(

JRJC

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

  • JRJC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.7 million.
  • JRJC has traded 332,217 shares today.
  • JRJC is trading at 8.15 times the normal volume for the stock at this time of day.
  • JRJC is trading at a new low 8.01% 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 JRJC:

TheStreet Recommends

China Finance Online Co., Limited provides integrated financial information and services in the People's Republic of China and Hong Kong.

The average volume for China Finance Online has been 530,400 shares per day over the past 30 days. China Finance Online has a market cap of $108.0 million and is part of the technology sector and internet industry. Shares are up 7.9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates China Finance Online as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • JRJC's very impressive revenue growth greatly exceeded the industry average of 18.7%. Since the same quarter one year prior, revenues leaped by 60.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • JRJC 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. To add to this, JRJC has a quick ratio of 1.86, which demonstrates the ability of the company to cover short-term liquidity needs.
  • CHINA FINANCE ONLINE CO -ADR has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, CHINA FINANCE ONLINE CO -ADR continued to lose money by earning -$0.41 versus -$0.54 in the prior year.
  • The share price of CHINA FINANCE ONLINE CO -ADR has not done very well: it is down 9.76% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 52.5% when compared to the same quarter one year ago, falling from -$1.58 million to -$2.41 million.

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