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

Meritage Homes

(

MTH

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

  • MTH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.8 million.
  • MTH has traded 87,499 shares today.
  • MTH is trading at 4.66 times the normal volume for the stock at this time of day.
  • MTH is trading at a new high 3.03% 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 MTH:

Meritage Homes Corporation designs and builds single-family detached homes in Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina, and Tennessee in the United States. The company operates through two segments, Homebuilding and Financial Services. MTH has a PE ratio of 13.1. Currently there are 4 analysts that rate Meritage Homes a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Meritage Homes has been 626,200 shares per day over the past 30 days. Meritage Homes has a market cap of $1.8 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.74 and a short float of 14.6% with 9.74 days to cover. Shares are up 24.7% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Meritage Homes as a

buy

. 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, attractive valuation levels, good cash flow from operations and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 0.0%. Since the same quarter one year prior, revenues rose by 30.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.84, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Household Durables industry average, but is less than that of the S&P 500. The net income increased by 6.8% when compared to the same quarter one year prior, going from $46.09 million to $49.21 million.
  • Net operating cash flow has significantly increased by 153.27% to $24.91 million when compared to the same quarter last year. In addition, MERITAGE HOMES CORP has also vastly surpassed the industry average cash flow growth rate of 27.59%.

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