Trade-Ideas LLC identified

Covenant Transportation Group

(

CVTI

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

  • CVTI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.3 million.
  • CVTI has traded 52,801 shares today.
  • CVTI is trading at 8.91 times the normal volume for the stock at this time of day.
  • CVTI is trading at a new low 3.26% 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 CVTI:

Covenant Transportation Group, Inc., together with its subsidiaries, provides truckload transportation and brokerage services primarily in the continental United States. CVTI has a PE ratio of 8. Currently there are 2 analysts that rate Covenant Transportation Group a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Covenant Transportation Group has been 152,800 shares per day over the past 30 days. Covenant Transportation Group has a market cap of $303.5 million and is part of the services sector and transportation industry. The stock has a beta of 1.41 and a short float of 5.2% with 2.15 days to cover. Shares are down 5.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Covenant Transportation Group as a

buy

. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations, 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 has had sub par growth in net income.

Highlights from the ratings report include:

  • Net operating cash flow has increased to $51.51 million or 48.22% when compared to the same quarter last year. In addition, COVENANT TRANSPORTATION GRP has also vastly surpassed the industry average cash flow growth rate of -2.98%.
  • The debt-to-equity ratio is somewhat low, currently at 0.93, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.86 is somewhat weak and could be cause for future problems.
  • 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 Road & Rail industry and the overall market on the basis of return on equity, COVENANT TRANSPORTATION GRP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 13.8%. Since the same quarter one year prior, revenues slightly dropped by 6.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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