Trade-Ideas LLC identified

Sonic

(

SONC

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

  • SONC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $34.5 million.
  • SONC has traded 170,534 shares today.
  • SONC is trading at 6.62 times the normal volume for the stock at this time of day.
  • SONC is trading at a new high 3.01% 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in SONC with the Ticky from Trade-Ideas. See the FREE profile for SONC NOW at Trade-Ideas

More details on SONC:

TST Recommends

Sonic Corp. operates and franchises a chain of quick-service drive-in restaurants in the United States. As of August 31, 2015, the company operated 3,526 Sonic Drive-Ins in 44 states, which included 387 company drive-ins and 3,139 franchise drive-ins. It also leases real estate properties. The stock currently has a dividend yield of 1.6%. SONC has a PE ratio of 22. Currently there are 8 analysts that rate Sonic a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Sonic has been 1.2 million shares per day over the past 30 days. Sonic has a market cap of $1.4 billion and is part of the services sector and leisure industry. The stock has a beta of 1.67 and a short float of 12.1% with 4.79 days to cover. Shares are down 14.7% year-to-date as of the close of trading on Friday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Sonic as a

buy

. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • SONIC CORP has improved earnings per share by 33.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SONIC CORP increased its bottom line by earning $1.20 versus $0.85 in the prior year. This year, the market expects an improvement in earnings ($1.31 versus $1.20).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Hotels, Restaurants & Leisure industry average. The net income increased by 23.5% when compared to the same quarter one year prior, going from $10.09 million to $12.46 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 13.2%. Since the same quarter one year prior, revenues slightly increased by 4.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 39.50% is the gross profit margin for SONIC CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 8.54% trails the industry average.
  • Net operating cash flow has decreased to $25.77 million or 23.53% when compared to the same quarter last year. Despite a decrease in cash flow SONIC CORP is still fairing well by exceeding its industry average cash flow growth rate of -53.51%.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.