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Trade-Ideas LLC identified

Open Text

(

OTEX

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

  • OTEX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $18.4 million.
  • OTEX has traded 304,334 shares today.
  • OTEX is trading at 31.06 times the normal volume for the stock at this time of day.
  • OTEX is trading at a new high 13.02% 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 OTEX:

TheStreet Recommends

Open Text Corporation provides a suite of software products and services that assist organizations in finding, utilizing, and sharing business information from various devices. The stock currently has a dividend yield of 1.8%. OTEX has a PE ratio of 25. Currently there are 8 analysts that rate Open Text a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Open Text has been 249,900 shares per day over the past 30 days. Open Text has a market cap of $5.3 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.48 and a short float of 3.1% with 8.92 days to cover. Shares are down 10.6% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Open Text as a

buy

. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • The gross profit margin for OPEN TEXT CORP is currently very high, coming in at 72.35%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, OTEX's net profit margin of 9.50% significantly trails the industry average.
  • OTEX's debt-to-equity ratio of 0.88 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that OTEX's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.79 is high and demonstrates strong liquidity.
  • OPEN TEXT CORP's earnings per share declined by 35.8% in the most recent quarter compared to the same quarter a year ago. 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, OPEN TEXT CORP increased its bottom line by earning $1.91 versus $1.81 in the prior year. This year, the market expects an improvement in earnings ($3.57 versus $1.91).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 6.3%. Since the same quarter one year prior, revenues slightly dropped by 4.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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