Trade-Ideas LLC identified

Mercer International

(

MERC

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

  • MERC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.9 million.
  • MERC has traded 121,935 shares today.
  • MERC is trading at 3.92 times the normal volume for the stock at this time of day.
  • MERC is trading at a new low 3.23% 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 MERC:

TheStreet Recommends

Mercer International Inc., together with its subsidiaries, manufactures and sells northern bleached softwood kraft (NBSK) pulp worldwide. The stock currently has a dividend yield of 4.3%. MERC has a PE ratio of 6. Currently there are 3 analysts that rate Mercer International a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Mercer International has been 239,000 shares per day over the past 30 days. Mercer International has a market cap of $688.9 million and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.39 and a short float of 1.3% with 1.45 days to cover. Shares are down 16.8% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Mercer International as a

hold

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth 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, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:

  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Paper & Forest Products industry. The net income increased by 2774.3% when compared to the same quarter one year prior, rising from $0.57 million to $16.41 million.
  • MERC, with its decline in revenue, slightly underperformed the industry average of 5.4%. Since the same quarter one year prior, revenues slightly dropped by 6.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Net operating cash flow has significantly decreased to $10.43 million or 50.98% when compared to the same quarter last year. Despite a decrease in cash flow MERCER INTL INC is still fairing well by exceeding its industry average cash flow growth rate of -69.69%.
  • Currently the debt-to-equity ratio of 1.75 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, MERC has managed to keep a strong quick ratio of 2.26, which demonstrates the ability to cover short-term cash needs.

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