Trade-Ideas LLC identified

Domtar

(

UFS

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

  • UFS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.9 million.
  • UFS has traded 456,954 shares today.
  • UFS is trading at 11.13 times the normal volume for the stock at this time of day.
  • UFS is trading at a new high 4.03% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 UFS:

Domtar Corporation designs, manufactures, markets, and distributes communications papers, specialty and packaging papers, and absorbent hygiene products in the United States, Canada, Europe, Asia, and internationally. It operates through two segments, Pulp and Paper, and Personal Care. The stock currently has a dividend yield of 4.2%. UFS has a PE ratio of 17. Currently there are 3 analysts that rate Domtar a buy, 2 analysts rate it a sell, and 4 rate it a hold.

The average volume for Domtar has been 600,900 shares per day over the past 30 days. Domtar has a market cap of $2.4 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.53 and a short float of 6.7% with 5.37 days to cover. Shares are up 4.9% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Domtar as a

hold

. The company's strengths can be seen in multiple areas, such as its attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • The current debt-to-equity ratio, 0.48, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.97 is somewhat weak and could be cause for future problems.
  • UFS, with its decline in revenue, slightly underperformed the industry average of 2.6%. Since the same quarter one year prior, revenues slightly dropped by 4.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Net operating cash flow has decreased to $137.00 million or 26.34% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Paper & Forest Products industry and the overall market, DOMTAR CORP's return on equity is below that of both the industry average and the S&P 500.

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