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

Novatel Wireless

(

MIFI

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

  • MIFI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.9 million.
  • MIFI has traded 77,169 shares today.
  • MIFI is trading at 4.56 times the normal volume for the stock at this time of day.
  • MIFI is trading at a new low 6.34% 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 MIFI:

Novatel Wireless, Inc. provides wireless broadband access solutions for the mobile communications market worldwide. It operates in the Mobile Computing Products, and M2M Products and Solutions segments. Currently there are 2 analysts that rate Novatel Wireless a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Novatel Wireless has been 288,200 shares per day over the past 30 days. Novatel Wireless has a market cap of $237.5 million and is part of the technology sector and telecommunications industry. The stock has a beta of 0.89 and a short float of 2.6% with 1.66 days to cover. Shares are up 71.4% year-to-date as of the close of trading on Friday.

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 Novatel Wireless as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity 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 Communications Equipment industry. The net income has significantly decreased by 73.4% when compared to the same quarter one year ago, falling from -$5.09 million to -$8.83 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 Communications Equipment industry and the overall market, NOVATEL WIRELESS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for NOVATEL WIRELESS INC is currently lower than what is desirable, coming in at 27.51%. Regardless of MIFI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, MIFI's net profit margin of -19.92% significantly underperformed when compared to the industry average.
  • MIFI, with its very weak revenue results, has greatly underperformed against the industry average of 5.2%. Since the same quarter one year prior, revenues plummeted by 52.2%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • NOVATEL WIRELESS 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. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NOVATEL WIRELESS INC continued to lose money by earning -$1.28 versus -$2.73 in the prior year. This year, the market expects an improvement in earnings (-$0.57 versus -$1.28).

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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