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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 or Stephanie Link.

Trade-Ideas LLC identified

Emerald Oil

(

EOX

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

  • EOX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $8.8 million.
  • EOX has traded 215,478 shares today.
  • EOX is trading at 7.71 times the normal volume for the stock at this time of day.
  • EOX is trading at a new low 3.06% 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 EOX:

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TheStreet Recommends

Emerald Oil, Inc. operates as an independent oil and natural gas exploration and production company in the United States. Currently there are 8 analysts that rate Emerald Oil a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Emerald Oil has been 1.1 million shares per day over the past 30 days. Emerald Oil has a market cap of $408.8 million and is part of the basic materials sector and energy industry. The stock has a beta of 2.32 and a short float of 25.1% with 10.01 days to cover. Shares are down 23.1% year-to-date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Emerald Oil 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 impressive record of earnings per share growth. 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:

  • EOX's very impressive revenue growth greatly exceeded the industry average of 3.0%. Since the same quarter one year prior, revenues leaped by 118.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.51, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, EOX has a quick ratio of 1.64, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for EMERALD OIL INC is currently very high, coming in at 70.32%. Regardless of EOX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EOX's net profit margin of -7.92% significantly underperformed when compared to the industry average.
  • In its most recent trading session, EOX has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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 underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income has decreased by 13.2% when compared to the same quarter one year ago, dropping from -$1.72 million to -$1.95 million.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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