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Trade-Ideas LLC identified

New Gold

(

NGD

) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified New Gold as such a stock due to the following factors:

  • NGD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $30.2 million.
  • NGD has traded 356,976 shares today.
  • NGD is down 3% today.
  • NGD was up 5.7% yesterday.

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More details on NGD:

New Gold, Inc., a gold mining company, engages in the acquisition, exploration, development, and operation of mineral properties. It primarily explores for gold, silver, and copper deposits. Currently there are 3 analysts that rate New Gold a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for New Gold has been 4.9 million shares per day over the past 30 days. New has a market cap of $2.5 billion and is part of the basic materials sector and metals & mining industry. Shares are up 124.1% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates New Gold as a

sell

. Among the areas we feel are negative, one of the most important has been unimpressive growth in net income over time.

Highlights from the ratings report include:

  • 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 190.7% when compared to the same quarter one year ago, falling from $9.70 million to -$8.80 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, NEW GOLD INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • NEW GOLD INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, NEW GOLD INC continued to lose money by earning -$0.40 versus -$0.95 in the prior year.
  • Compared to its closing price of one year ago, NGD's share price has jumped by 127.35%, exceeding the performance of the broader market during that same time frame. Regarding the future course of this stock, we feel that the risks involved in investing in NGD do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • The gross profit margin for NEW GOLD INC is rather high; currently it is at 53.02%. It has increased significantly from the same period last year.

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