Trade-Ideas LLC identified

Ternium

(

TX

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

  • TX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.6 million.
  • TX has traded 85,660 shares today.
  • TX is trading at 4.53 times the normal volume for the stock at this time of day.
  • TX is trading at a new low 3.13% 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 TX:

Ternium S.A. manufactures and processes various steel products in Mexico, Argentina, Bolivia, Chile, Paraguay, Uruguay, the United States, Central America, Colombia, and internationally. It operates through two segments, Steel and Mining. The stock currently has a dividend yield of 6%. TX has a PE ratio of 11. Currently there are 3 analysts that rate Ternium a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Ternium has been 218,000 shares per day over the past 30 days. Ternium has a market cap of $3.0 billion and is part of the basic materials sector and metals & mining industry. Shares are down 14.8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Ternium as a

hold

. The company's strengths can be seen in multiple areas, such as its increase in net income, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 104.7% when compared to the same quarter one year prior, rising from -$530.89 million to $24.82 million.
  • TERNIUM SA -ADR reported significant earnings per share improvement in the most recent quarter compared to 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, TERNIUM SA -ADR swung to a loss, reporting -$4.27 versus $2.32 in the prior year. This year, the market expects an improvement in earnings ($0.80 versus -$4.27).
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Metals & Mining industry and the overall market, TERNIUM SA -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for TERNIUM SA -ADR is rather low; currently it is at 21.69%. It has decreased from the same quarter the previous year.

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