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.

Trade-Ideas LLC identified

Jakks Pacific

(

JAKK

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

  • JAKK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.2 million.
  • JAKK has traded 50,444 shares today.
  • JAKK is trading at 2.31 times the normal volume for the stock at this time of day.
  • JAKK is trading at a new low 3.03% 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 JAKK:

JAKKS Pacific, Inc. designs, develops, produces, and markets consumer products in the United States and internationally. JAKK has a PE ratio of 11. Currently there are 3 analysts that rate Jakks Pacific a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Jakks Pacific has been 593,500 shares per day over the past 30 days. Jakks Pacific has a market cap of $185.6 million and is part of the consumer goods sector and consumer durables industry. The stock has a beta of 0.99 and a short float of 44.6% with 12.04 days to cover. Shares are up 16.6% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Jakks Pacific as a

sell

. The company's weaknesses can be seen in multiple areas, such as its poor profit margins, generally disappointing historical performance in the stock itself and generally high debt management risk.

Highlights from the ratings report include:

  • The gross profit margin for JAKKS PACIFIC INC is currently lower than what is desirable, coming in at 31.68%. Regardless of JAKK's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, JAKK's net profit margin of -6.63% significantly underperformed when compared to the industry average.
  • Currently the debt-to-equity ratio of 1.59 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Regardless of the company's weak debt-to-equity ratio, JAKK has managed to keep a strong quick ratio of 2.08, which demonstrates the ability to cover short-term cash needs.
  • In its most recent trading session, JAKK 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's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Leisure Equipment & Products industry and the overall market on the basis of return on equity, JAKKS PACIFIC INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

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