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Trade-Ideas LLC identified

CPFL Energia

(

CPL

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

  • CPL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.6 million.
  • CPL has traded 52,171 shares today.
  • CPL is trading at 2.08 times the normal volume for the stock at this time of day.
  • CPL is trading at a new low 4.01% 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 CPL:

TheStreet Recommends

CPFL Energia S.A., together with its subsidiaries, generates, distributes, and sells electricity to industrial, residential, commercial, rural, and other consumers in Brazil. The company generates electricity through hydroelectric, thermoelectric, biomass, solar energy, and wind power plants. CPL has a PE ratio of 13. Currently there is 1 analyst that rates CPFL Energia a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for CPFL Energia has been 406,300 shares per day over the past 30 days. CPFL Energia has a market cap of $5.2 billion and is part of the utilities sector and utilities industry. Shares are up 36.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates CPFL Energia as a

hold

. The company's strengths can be seen in multiple areas, such as its increase in net income and notable return on equity. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electric Utilities industry. The net income increased by 100.5% when compared to the same quarter one year prior, rising from $23.71 million to $47.53 million.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Electric Utilities industry and the overall market, CPFL ENERGIA SA's return on equity exceeds that of both the industry average and the S&P 500.
  • The revenue fell significantly faster than the industry average of 6.8%. Since the same quarter one year prior, revenues fell by 42.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for CPFL ENERGIA SA is currently extremely low, coming in at 14.75%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.57% trails that of the industry average.
  • Net operating cash flow has significantly decreased to $46.99 million or 78.31% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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