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Trade-Ideas LLC identified

Redwood

(

RWT

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

  • RWT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $8.7 million.
  • RWT has traded 146,728 shares today.
  • RWT is trading at 9.69 times the normal volume for the stock at this time of day.
  • RWT is trading at a new low 8.06% 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 RWT:

TheStreet Recommends

Redwood Trust, Inc., together with its subsidiaries, focuses on investing in mortgage-and other real estate-related assets; and engaging in residential and commercial mortgage banking activities in the United States. The stock currently has a dividend yield of 8.4%. RWT has a PE ratio of 13. Currently there are 3 analysts that rate Redwood a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Redwood has been 589,900 shares per day over the past 30 days. Redwood has a market cap of $1.1 billion and is part of the financial sector and real estate industry. The stock has a beta of 0.58 and a short float of 3.4% with 3.98 days to cover. Shares are down 31.3% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Redwood as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 0.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for REDWOOD TRUST INC is rather high; currently it is at 61.51%. Regardless of RWT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, RWT's net profit margin of 30.18% compares favorably to the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, REDWOOD TRUST INC's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to -$763.66 million or 2.21% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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