Trade-Ideas LLC identified

SolarWinds

(

SWI

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

  • SWI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $58.3 million.
  • SWI has traded 256,291 shares today.
  • SWI is trading at 6.90 times the normal volume for the stock at this time of day.
  • SWI 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.

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More details on SWI:

SolarWinds, Inc., together with its subsidiaries, designs, develops, markets, sells, and supports enterprise-class information technology (IT) and infrastructure management software to IT and DevOps professionals in various organizations worldwide. SWI has a PE ratio of 37. Currently there are 4 analysts that rate SolarWinds a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for SolarWinds has been 1.2 million shares per day over the past 30 days. SolarWinds has a market cap of $3.2 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.36 and a short float of 4.9% with 2.72 days to cover. Shares are down 4.7% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates SolarWinds as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and compelling growth in net income. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 9.8%. Since the same quarter one year prior, revenues rose by 17.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SWI has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.49, which illustrates the ability to avoid short-term cash problems.
  • The gross profit margin for SOLARWINDS INC is currently very high, coming in at 97.31%. Regardless of SWI's high profit margin, it has managed to decrease from the same period last year.
  • After a year of stock price fluctuations, the net result is that SWI's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • 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 Software industry and the overall market, SOLARWINDS INC's return on equity exceeds that of both the industry average and the S&P 500.

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