Trade-Ideas LLC identified

Nortek

(

NTK

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

  • NTK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.2 million.
  • NTK has traded 88,660 shares today.
  • NTK is trading at 2.71 times the normal volume for the stock at this time of day.
  • NTK is trading at a new high 3.19% 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 NTK:

Nortek, Inc. manufactures and sells products for remodeling and replacement, residential and commercial new construction, and personal and enterprise computer markets primarily in the United States, Canada, and Europe. Currently there are 2 analysts that rate Nortek a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Nortek has been 62,400 shares per day over the past 30 days. Nortek has a market cap of $843.7 million and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.01 and a short float of 4.4% with 8.02 days to cover. Shares are up 13.5% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Nortek as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, generally disappointing historical performance in the stock itself and poor profit margins.

Highlights from the ratings report include:

  • The debt-to-equity ratio is very high at 75.99 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, NTK maintains a poor quick ratio of 0.78, which illustrates the inability to avoid short-term cash problems.
  • NTK'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 39.04%, 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 gross profit margin for NORTEK INC is currently lower than what is desirable, coming in at 32.42%. Regardless of NTK's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.42% trails the industry average.
  • 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 Building Products industry and the overall market, NORTEK INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 84.62% to -$8.50 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 49.31%.

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