Trade-Ideas LLC identified

Enerplus

(

ERF

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

  • ERF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.7 million.
  • ERF has traded 167,264 shares today.
  • ERF is trading at 2.21 times the normal volume for the stock at this time of day.
  • ERF is trading at a new low 7.22% 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 ERF:

Enerplus Corporation, together with subsidiaries, engages in the exploration and development of crude oil and natural gas in the United States and Canada. The stock currently has a dividend yield of 9%. Currently there are 3 analysts that rate Enerplus a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Enerplus has been 1.8 million shares per day over the past 30 days. Enerplus has a market cap of $603.1 million and is part of the basic materials sector and energy industry. The stock has a beta of 1.01 and a short float of 0.4% with 2.79 days to cover. Shares are down 23.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Enerplus as a

sell

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

Highlights from the ratings report include:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 534.0% when compared to the same quarter one year ago, falling from $67.43 million to -$292.67 million.
  • 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ENERPLUS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $122.65 million or 38.38% when compared to the same quarter last year. Despite a decrease in cash flow of 38.38%, ENERPLUS CORP is in line with the industry average cash flow growth rate of -39.19%.
  • ERF's debt-to-equity ratio of 0.82 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.45 is very low and demonstrates very weak liquidity.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 73.10%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 543.75% compared to the year-earlier 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.

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