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Trade-Ideas LLC identified

Basic Energy Services

(

BAS

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

  • BAS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.1 million.
  • BAS has traded 279,966 shares today.
  • BAS is trading at 2.60 times the normal volume for the stock at this time of day.
  • BAS is trading at a new low 10.09% 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 BAS:

TheStreet Recommends

Basic Energy Services, Inc. provides well site services to oil and natural gas drilling and producing companies in the United States. Currently there are 4 analysts that rate Basic Energy Services a buy, 1 analyst rates it a sell, and 11 rate it a hold.

The average volume for Basic Energy Services has been 2.5 million shares per day over the past 30 days. Basic Energy Services has a market cap of $106.1 million and is part of the basic materials sector and energy industry. The stock has a beta of 2.58 and a short float of 39.7% with 10.32 days to cover. Shares are down 12.7% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Basic Energy Services as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow 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 Energy Equipment & Services industry. The net income has significantly decreased by 1163.8% when compared to the same quarter one year ago, falling from $9.93 million to -$105.64 million.
  • 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 Energy Equipment & Services industry and the overall market, BASIC ENERGY SERVICES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for BASIC ENERGY SERVICES INC is rather low; currently it is at 18.15%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -55.82% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $4.96 million or 86.88% 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 debt-to-equity ratio is very high at 5.57 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, BAS's quick ratio is somewhat strong at 1.09, demonstrating the ability to handle short-term liquidity needs.

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