Trade-Ideas LLC identified

Ecopetrol

(

EC

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

  • EC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $10.8 million.
  • EC has traded 253,669 shares today.
  • EC is trading at 4.80 times the normal volume for the stock at this time of day.
  • EC is trading at a new high 3.09% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 EC:

Ecopetrol S.A., an integrated oil company, engages in the exploration, development, and production of crude oil and natural gas in Colombia, Peru, Brazil, Angola, and the United States Gulf Coast. The stock currently has a dividend yield of 11.5%. EC has a PE ratio of 1566. Currently there is 1 analyst that rates Ecopetrol a buy, 3 analysts rate it a sell, and 1 rates it a hold.

The average volume for Ecopetrol has been 1.5 million shares per day over the past 30 days. Ecopetrol has a market cap of $18.6 billion and is part of the basic materials sector and energy industry. Shares are up 29.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Ecopetrol as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • The debt-to-equity ratio of 1.23 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, EC has a quick ratio of 0.66, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • 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. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ECOPETROL SA's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • EC'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 38.57%, 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. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • Net operating cash flow has decreased to $1,241.17 million or 10.05% when compared to the same quarter last year. Despite a decrease in cash flow ECOPETROL SA is still fairing well by exceeding its industry average cash flow growth rate of -49.17%.
  • EC, with its decline in revenue, slightly underperformed the industry average of 24.6%. Since the same quarter one year prior, revenues fell by 28.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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