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

Steel Dynamics

(

STLD

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

  • STLD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $70.5 million.
  • STLD has traded 434,886 shares today.
  • STLD is trading at 2.69 times the normal volume for the stock at this time of day.
  • STLD is trading at a new high 3.05% 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 STLD:

Steel Dynamics, Inc., together with its subsidiaries, manufactures and sells steel products, processes and sells recycled ferrous and nonferrous metals, and fabricates and sells steel joist and decking products in the United States and internationally. The stock currently has a dividend yield of 2.9%. STLD has a PE ratio of 42. Currently there are 11 analysts that rate Steel Dynamics a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Steel Dynamics has been 2.7 million shares per day over the past 30 days. Steel Dynamics has a market cap of $4.6 billion and is part of the basic materials sector and metals & mining industry. The stock has a beta of 1.12 and a short float of 2.6% with 1.65 days to cover. Shares are down 3.5% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Steel Dynamics as a

hold

. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and disappointing return on equity.

Highlights from the ratings report include:

  • Net operating cash flow has significantly increased by 306.78% to $309.21 million when compared to the same quarter last year. In addition, STEEL DYNAMICS INC has also vastly surpassed the industry average cash flow growth rate of -53.97%.
  • STLD's debt-to-equity ratio of 0.91 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 STLD's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.77 is high and demonstrates strong liquidity.
  • Despite the weak revenue results, STLD has outperformed against the industry average of 17.4%. Since the same quarter one year prior, revenues slightly dropped by 3.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for STEEL DYNAMICS INC is currently extremely low, coming in at 11.95%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.57% trails that of the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Metals & Mining industry. The net income has significantly decreased by 56.4% when compared to the same quarter one year ago, falling from $72.30 million to $31.55 million.

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