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.

Trade-Ideas LLC identified

Qihoo 360 Technology

(

QIHU

) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Qihoo 360 Technology as such a stock due to the following factors:

  • QIHU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $138.5 million.
  • QIHU has traded 601,691 shares today.
  • QIHU is trading at 2.88 times the normal volume for the stock at this time of day.
  • QIHU is trading at a new low 4.01% 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 QIHU:

Qihoo 360 Technology Co. Ltd. provides Internet and mobile security products and services in the People's Republic of China. QIHU has a PE ratio of 45.5. Currently there are 6 analysts that rate Qihoo 360 Technology a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Qihoo 360 Technology has been 2.6 million shares per day over the past 30 days. Qihoo 360 Technology has a market cap of $6.5 billion and is part of the technology sector and computer software & services industry. Shares are down 9.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Qihoo 360 Technology as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and generally higher debt management risk.

Highlights from the ratings report include:

  • QIHU's very impressive revenue growth greatly exceeded the industry average of 18.6%. Since the same quarter one year prior, revenues leaped by 94.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • QIHOO 360 TECHNOLGY CO -ADR reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, QIHOO 360 TECHNOLGY CO -ADR increased its bottom line by earning $1.71 versus $0.76 in the prior year. This year, the market expects an improvement in earnings ($3.48 versus $1.71).
  • The gross profit margin for QIHOO 360 TECHNOLGY CO -ADR is currently very high, coming in at 81.90%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 17.81% trails the industry average.
  • QIHU'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 56.71%, 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • Currently the debt-to-equity ratio of 1.59 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 3.44, which shows the ability to cover short-term cash needs.

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