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

Sonus Networks

(

SONS

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

  • SONS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.8 million.
  • SONS has traded 607,579 shares today.
  • SONS is trading at 21.15 times the normal volume for the stock at this time of day.
  • SONS is trading at a new high 15.01% 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 SONS:

Sonus Networks, Inc. provides networked solutions for communications service providers and enterprises. Currently there are 2 analysts that rate Sonus Networks a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Sonus Networks has been 902,900 shares per day over the past 30 days. Sonus has a market cap of $304.1 million and is part of the technology sector and telecommunications industry. The stock has a beta of 2.62 and a short float of 11% with 6.89 days to cover. Shares are down 69.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Sonus Networks 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 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 Communications Equipment industry. The net income has significantly decreased by 389.7% when compared to the same quarter one year ago, falling from -$3.95 million to -$19.36 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Communications Equipment industry and the overall market, SONUS NETWORKS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$17.48 million or 182.41% 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 69.21%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 680.00% 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.
  • SONS, with its decline in revenue, underperformed when compared the industry average of 11.2%. Since the same quarter one year prior, revenues fell by 29.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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