Trade-Ideas LLC identified

K2M Group Holdings

(

KTWO

) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified K2M Group Holdings as such a stock due to the following factors:

  • KTWO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.7 million.
  • KTWO has traded 65,838 shares today.
  • KTWO is trading at 3.43 times the normal volume for the stock at this time of day.
  • KTWO is trading at a new low 3.07% 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 KTWO:

K2M Group Holdings, Inc., a medical device company, focuses on designing, developing, and commercializing proprietary complex spine technologies and techniques in the United States and internationally. Currently there are 7 analysts that rate K2M Group Holdings a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for K2M Group Holdings has been 238,500 shares per day over the past 30 days. K2M Group has a market cap of $539.9 million and is part of the health care sector and health services industry. Shares are down 24.2% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates K2M Group Holdings as a

sell

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

Highlights from the ratings report include:

  • Net operating cash flow has significantly decreased to -$5.12 million or 212.39% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • KTWO'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 41.78%, 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, K2M GROUP HOLDINGS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for K2M GROUP HOLDINGS INC is currently very high, coming in at 78.35%. Regardless of KTWO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, KTWO's net profit margin of -15.66% significantly underperformed when compared to the industry average.
  • K2M GROUP HOLDINGS INC has improved earnings per share by 30.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, K2M GROUP HOLDINGS INC continued to lose money by earning -$0.99 versus -$1.61 in the prior year. This year, the market expects an improvement in earnings (-$0.89 versus -$0.99).

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