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

Rocket Fuel

(

FUEL

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

  • FUEL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.7 million.
  • FUEL has traded 81,177 shares today.
  • FUEL is trading at 2.85 times the normal volume for the stock at this time of day.
  • FUEL is trading at a new high 3.07% 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 FUEL:

Rocket Fuel Inc., a technology company, provides artificial-intelligence digital advertising solutions. Currently there are no analysts that rate Rocket Fuel a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Rocket Fuel has been 595,200 shares per day over the past 30 days. Rocket Fuel has a market cap of $302.9 million and is part of the services sector and media industry. The stock has a beta of 0.63 and a short float of 20% with 8.09 days to cover. Shares are down 55.5% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Rocket Fuel as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

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 Internet Software & Services industry. The net income has significantly decreased by 228.4% when compared to the same quarter one year ago, falling from -$11.23 million to -$36.86 million.
  • Net operating cash flow has significantly decreased to -$4.20 million or 249.45% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 68.90%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 166.66% 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.
  • ROCKET FUEL INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ROCKET FUEL INC reported poor results of -$1.71 versus -$0.68 in the prior year. This year, the market expects an improvement in earnings (-$1.37 versus -$1.71).
  • 48.58% is the gross profit margin for ROCKET FUEL INC which we consider to be strong. Regardless of FUEL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FUEL's net profit margin of -35.33% significantly underperformed when compared to the industry average.

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