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

Quantum

(

QTM

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

  • QTM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.8 million.
  • QTM has traded 386,653 shares today.
  • QTM is trading at 2.79 times the normal volume for the stock at this time of day.
  • QTM is trading at a new low 3.28% 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 QTM:

TST Recommends

Quantum Corporation provides scale-out storage, archive, and data protection solutions for small businesses to major enterprises in the Americas, Europe, and the Asia Pacific. Currently there are 2 analysts that rate Quantum a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Quantum has been 1.5 million shares per day over the past 30 days. Quantum has a market cap of $471.8 million and is part of the technology sector and computer hardware industry. The stock has a beta of 1.83 and a short float of 7.5% with 4.21 days to cover. Shares are up 4% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Quantum as a

sell

. Among the areas we feel are negative, one of the most important has been weak operating cash flow.

Highlights from the ratings report include:

  • Net operating cash flow has significantly decreased to $2.57 million or 64.88% 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 revenue fell significantly faster than the industry average of 31.9%. Since the same quarter one year prior, revenues slightly dropped by 2.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 47.39% is the gross profit margin for QUANTUM CORP which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, QTM's net profit margin of 4.87% significantly trails the industry average.
  • This stock has increased by 27.35% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in QTM do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • QUANTUM CORP 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, QUANTUM CORP continued to lose money by earning -$0.09 versus -$0.22 in the prior year. This year, the market expects an improvement in earnings ($0.09 versus -$0.09).

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