Trade-Ideas LLC identified

LKQ

(

LKQ

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

  • LKQ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $52.4 million.
  • LKQ has traded 171,416 shares today.
  • LKQ is trading at 2.49 times the normal volume for the stock at this time of day.
  • LKQ 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 LKQ:

LKQ Corporation, together with its subsidiaries, distributes replacement parts, components, and systems used in the repair and maintenance of vehicles in the United States, the United Kingdom, and internationally. It operates in three segments: North America, Europe, and Specialty. LKQ has a PE ratio of 24. Currently there are 9 analysts that rate LKQ a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for LKQ has been 3.1 million shares per day over the past 30 days. LKQ has a market cap of $10.4 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 0.93 and a short float of 2.2% with 3.68 days to cover. Shares are up 15.2% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates LKQ as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, increase in net income, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 1.8%. Since the same quarter one year prior, revenues slightly increased by 8.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • 39.65% is the gross profit margin for LKQ CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 5.60% is above that of the industry average.
  • LKQ CORP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LKQ CORP increased its bottom line by earning $1.38 versus $1.24 in the prior year. This year, the market expects an improvement in earnings ($1.80 versus $1.38).
  • The net income growth from the same quarter one year ago has exceeded that of the Distributors industry average, but is less than that of the S&P 500. The net income increased by 0.6% when compared to the same quarter one year prior, going from $107.10 million to $107.73 million.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

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