Trade-Ideas LLC identified

Caterpillar

(

CAT

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

  • CAT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $501.1 million.
  • CAT has traded 1.3 million shares today.
  • CAT is trading at 2.97 times the normal volume for the stock at this time of day.
  • CAT is trading at a new high 3.00% 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 CAT:

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. The stock currently has a dividend yield of 4.7%. CAT has a PE ratio of 13. Currently there is 1 analyst that rates Caterpillar a buy, no analysts rate it a sell, and 14 rate it a hold.

The average volume for Caterpillar has been 6.9 million shares per day over the past 30 days. Caterpillar has a market cap of $37.9 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.13 and a short float of 7.7% with 6.19 days to cover. Shares are down 28.7% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Caterpillar as a

hold

. Among the primary strengths of the company is its reasonable valuation levels, considering its current price compared to earnings, book value and other measures. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and poor profit margins.

Highlights from the ratings report include:

  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 21.8%. Since the same quarter one year prior, revenues fell by 19.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • CATERPILLAR 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 reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CATERPILLAR INC increased its bottom line by earning $5.87 versus $5.75 in the prior year. For the next year, the market is expecting a contraction of 21.6% in earnings ($4.60 versus $5.87).
  • 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 Machinery industry. The net income has significantly decreased by 63.8% when compared to the same quarter one year ago, falling from $1,017.00 million to $368.00 million.
  • The debt-to-equity ratio is very high at 2.36 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, CAT maintains a poor quick ratio of 0.85, which illustrates the inability to avoid short-term cash problems.

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