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.

Trade-Ideas LLC identified

Monotype Imaging Holdings

(

TYPE

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

  • TYPE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.8 million.
  • TYPE has traded 69,605 shares today.
  • TYPE is trading at 14.71 times the normal volume for the stock at this time of day.
  • TYPE is trading at a new high 8.20% 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 TYPE:

Monotype Imaging Holdings Inc. develops, markets, and licenses technologies and fonts in the United States, the United Kingdom, Germany, Japan, and rest of Asia. The stock currently has a dividend yield of 1.7%. TYPE has a PE ratio of 3. Currently there are 2 analysts that rate Monotype Imaging Holdings a buy, 1 analyst rates it a sell, and none rate it a hold.

The average volume for Monotype Imaging Holdings has been 175,800 shares per day over the past 30 days. Monotype Imaging has a market cap of $945.6 million and is part of the technology sector and computer software & services industry. The stock has a beta of 0.59 and a short float of 1.7% with 5.55 days to cover. Shares are down 17.9% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Monotype Imaging Holdings as a

buy

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • TYPE has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.16, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for MONOTYPE IMAGING HOLDINGS is currently very high, coming in at 84.92%. Regardless of TYPE's high profit margin, it has managed to decrease from the same period last year.
  • MONOTYPE IMAGING HOLDINGS's earnings per share declined by 14.3% 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, MONOTYPE IMAGING HOLDINGS increased its bottom line by earning $0.80 versus $0.78 in the prior year. This year, the market expects an improvement in earnings ($1.07 versus $0.80).
  • Despite the weak revenue results, TYPE has outperformed against the industry average of 11.5%. Since the same quarter one year prior, revenues slightly dropped by 0.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

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