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Trade-Ideas LLC identified

Redwood

(

RWT

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

  • RWT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $6.0 million.
  • RWT has traded 55,968 shares today.
  • RWT is trading at 4.16 times the normal volume for the stock at this time of day.
  • RWT is trading at a new high 3.00% 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 RWT:

Redwood Trust, Inc., together with its subsidiaries, focuses on investing in mortgage- and other real estate-related assets; and engaging in residential and commercial mortgage banking activities in the United States. The stock currently has a dividend yield of 8.3%. RWT has a PE ratio of 12. Currently there are 3 analysts that rate Redwood a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Redwood has been 594,700 shares per day over the past 30 days. Redwood has a market cap of $1.0 billion and is part of the financial sector and real estate industry. The stock has a beta of 0.70 and a short float of 4% with 6.24 days to cover. Shares are up 1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Redwood as a

hold

. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • REDWOOD TRUST INC's earnings per share declined by 6.3% 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, REDWOOD TRUST INC increased its bottom line by earning $1.15 versus $1.13 in the prior year. This year, the market expects an improvement in earnings ($1.35 versus $1.15).
  • RWT, with its decline in revenue, underperformed when compared the industry average of 11.8%. Since the same quarter one year prior, revenues slightly dropped by 2.2%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, RWT has underperformed the S&P 500 Index, declining 19.60% from its price level of one year ago. 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, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income has decreased by 18.5% when compared to the same quarter one year ago, dropping from $14.80 million to $12.06 million.

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