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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

Select Income REIT

(

SIR

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

  • SIR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $15.9 million.
  • SIR has traded 66,933 shares today.
  • SIR is trading at 2.72 times the normal volume for the stock at this time of day.
  • SIR is trading at a new high 3.04% 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 SIR:

TheStreet Recommends

Select Income REIT, a real estate investment trust (REIT), primarily owns and invests in single tenant and net leased properties. The stock currently has a dividend yield of 10%. SIR has a PE ratio of 14. Currently there is 1 analyst that rates Select Income REIT a buy, 2 analysts rate it a sell, and 2 rate it a hold.

The average volume for Select Income REIT has been 655,600 shares per day over the past 30 days. Select Income REIT has a market cap of $1.8 billion and is part of the financial sector and real estate industry. Shares are down 20.4% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Select Income REIT as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:

  • SIR's very impressive revenue growth greatly exceeded the industry average of 8.9%. Since the same quarter one year prior, revenues leaped by 78.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • 35.80% is the gross profit margin for SELECT INCOME REIT which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, SIR's net profit margin of 4.20% is significantly lower than the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 84.1% when compared to the same quarter one year ago, falling from $25.06 million to $3.98 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, SELECT INCOME REIT's return on equity is below that of both the industry average and the S&P 500.

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