Trade-Ideas LLC identified

Sprouts Farmers Market

(

SFM

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

  • SFM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $62.9 million.
  • SFM has traded 972,646 shares today.
  • SFM is trading at 8.72 times the normal volume for the stock at this time of day.
  • SFM is trading at a new high 11.07% 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 SFM:

Sprouts Farmers Market, Inc. operates as a specialty retailer of fresh, natural, and organic food in the United States. SFM has a PE ratio of 32. Currently there are 9 analysts that rate Sprouts Farmers Market a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Sprouts Farmers Market has been 2.5 million shares per day over the past 30 days. Sprouts Farmers Market has a market cap of $3.8 billion and is part of the services sector and retail industry. Shares are down 5.2% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Sprouts Farmers Market as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, premium valuation, poor profit margins and disappointing return on equity.

Highlights from the ratings report include:

  • SFM's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 35.84%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, SFM is still more expensive than most of the other companies in its industry.
  • The gross profit margin for SPROUTS FARMERS MARKET is currently lower than what is desirable, coming in at 30.93%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 3.54% is above that of the industry average.
  • 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. Compared to other companies in the Food & Staples Retailing industry and the overall market on the basis of return on equity, SPROUTS FARMERS MARKET has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that SFM's debt-to-equity ratio is low, the quick ratio, which is currently 0.68, displays a potential problem in covering short-term cash needs.

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