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 or Stephanie Link.

Trade-Ideas LLC identified

SunEdison

(

SUNE

) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified SunEdison as such a stock due to the following factors:

  • SUNE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $250.5 million.
  • SUNE has traded 1.4 million shares today.
  • SUNE is trading at 1.64 times the normal volume for the stock at this time of day.
  • SUNE crossed above its 200-day simple moving average.

'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. 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 on. 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 SUNE:

TheStreet Recommends

SunEdison, Inc. develops, manufactures, and sells silicon wafers to the semiconductor industry. The company operates through two segments, Solar Energy and Semiconductor Materials. Currently there are 8 analysts that rate SunEdison a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for SunEdison has been 12.2 million shares per day over the past 30 days. SunEdison has a market cap of $5.4 billion and is part of the technology sector and electronics industry. The stock has a beta of 4.73 and a short float of 30.3% with 6.54 days to cover. Shares are up 1.6% year-to-date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates SunEdison as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and poor profit margins.

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 when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 156.7% when compared to the same quarter one year ago, falling from -$110.40 million to -$283.40 million.
  • The debt-to-equity ratio is very high at 16.45 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, SUNE has a quick ratio of 0.53, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, SUNEDISON INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$276.30 million or 169.29% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for SUNEDISON INC is currently lower than what is desirable, coming in at 25.69%. Regardless of SUNE's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SUNE's net profit margin of -41.60% significantly underperformed when compared to the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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