Trade-Ideas LLC identified

TerraForm Power

(

TERP

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

  • TERP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $69.5 million.
  • TERP has traded 1.0 million shares today.
  • TERP is trading at 6.47 times the normal volume for the stock at this time of day.
  • TERP is trading at a new low 9.06% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of 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 (or avoid losses by trimming weak positions). 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 TERP:

TerraForm Power, Inc. owns and operates solar and wind generation assets serving utility, commercial, and residential customers. The stock currently has a dividend yield of 16.7%. Currently there are 6 analysts that rate TerraForm Power a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for TerraForm Power has been 3.2 million shares per day over the past 30 days. TerraForm has a market cap of $669.9 million and is part of the utilities sector and utilities industry. Shares are down 71.4% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates TerraForm Power as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and generally high debt management risk.

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 Independent Power Producers & Energy Traders industry. The net income has significantly decreased by 286.6% when compared to the same quarter one year ago, falling from $1.91 million to -$3.56 million.
  • The debt-to-equity ratio is very high at 2.09 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 3.09, which shows the ability to cover short-term cash needs.
  • Compared to other companies in the Independent Power Producers & Energy Traders industry and the overall market, TERRAFORM POWER INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • TERP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 71.17%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter.
  • The gross profit margin for TERRAFORM POWER INC is currently very high, coming in at 72.93%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -2.18% is in-line with the industry average.

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