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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 or Stephanie Link.

Trade-Ideas LLC identified

Emerald Oil

(

EOX

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

  • EOX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.1 million.
  • EOX has traded 1.6 million shares today.
  • EOX is trading at 12.77 times the normal volume for the stock at this time of day.
  • EOX is trading at a new low 21.09% 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in EOX with the Ticky from Trade-Ideas. See the FREE profile for EOX NOW at Trade-Ideas

More details on EOX:

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TheStreet Recommends

Emerald Oil, Inc. operates as an independent oil and natural gas exploration and production company in the United States. Currently there are 5 analysts that rate Emerald Oil a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Emerald Oil has been 2.6 million shares per day over the past 30 days. Emerald Oil has a market cap of $101.3 million and is part of the basic materials sector and energy industry. The stock has a beta of 1.67 and a short float of 24.9% with 5.05 days to cover. Shares are down 80.2% year-to-date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Emerald Oil as a

sell

. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • EOX'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 78.20%, 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.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, EMERALD OIL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The current debt-to-equity ratio, 0.55, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that EOX's debt-to-equity ratio is low, the quick ratio, which is currently 0.58, displays a potential problem in covering short-term cash needs.
  • The gross profit margin for EMERALD OIL INC is currently very high, coming in at 74.68%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 34.22% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 51.22% to $11.07 million when compared to the same quarter last year. In addition, EMERALD OIL INC has also vastly surpassed the industry average cash flow growth rate of -1.72%.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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