Trade-Ideas LLC identified

Commercial Metals

(

CMC

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

  • CMC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $34.1 million.
  • CMC has traded 229,467 shares today.
  • CMC is trading at 3.89 times the normal volume for the stock at this time of day.
  • CMC is trading at a new low 4.00% 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 CMC:

Commercial Metals Company manufactures, recycles, and markets steel and metal products, and related materials and services in the United States and internationally. The stock currently has a dividend yield of 2.8%. CMC has a PE ratio of 15. Currently there are 2 analysts that rate Commercial Metals a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Commercial Metals has been 1.9 million shares per day over the past 30 days. Commercial has a market cap of $1.9 billion and is part of the basic materials sector and metals & mining industry. The stock has a beta of 0.89 and a short float of 10.3% with 5.36 days to cover. Shares are up 22.3% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Commercial Metals as a

buy

. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, solid stock price performance, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • Net operating cash flow has significantly increased by 374.82% to $219.57 million when compared to the same quarter last year. In addition, COMMERCIAL METALS has also vastly surpassed the industry average cash flow growth rate of -27.12%.
  • CMC's debt-to-equity ratio of 0.96 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.63 is very high and demonstrates very strong liquidity.
  • 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. When compared to other companies in the Metals & Mining industry and the overall market, COMMERCIAL METALS's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 39.7%. Since the same quarter one year prior, revenues fell by 31.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

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