Trade-Ideas LLC identified

Westlake Chemical

(

WLK

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

  • WLK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $46.0 million.
  • WLK has traded 189,602 shares today.
  • WLK is trading at 8.15 times the normal volume for the stock at this time of day.
  • WLK is trading at a new low 5.02% 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 WLK:

TheStreet Recommends

Westlake Chemical Corporation manufactures and markets basic chemicals, vinyls, polymers, and fabricated building products. It operates through two segments, Olefins and Vinyls. The stock currently has a dividend yield of 1.6%. WLK has a PE ratio of 8. Currently there are 3 analysts that rate Westlake Chemical a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Westlake Chemical has been 729,200 shares per day over the past 30 days. Westlake Chemical has a market cap of $5.9 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 1.67 and a short float of 2.7% with 1.56 days to cover. Shares are down 14.3% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Westlake Chemical as a

hold

. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including poor profit margins, a generally disappointing performance in the stock itself and disappointing return on equity.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 9.4% when compared to the same quarter one year prior, going from $167.76 million to $183.60 million.
  • WLK's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.31, which clearly demonstrates the ability to cover short-term cash needs.
  • Despite the weak revenue results, WLK has outperformed against the industry average of 19.4%. Since the same quarter one year prior, revenues slightly dropped by 5.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Chemicals industry and the overall market on the basis of return on equity, WESTLAKE CHEMICAL CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The gross profit margin for WESTLAKE CHEMICAL CORP is currently lower than what is desirable, coming in at 30.60%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 15.45% is above that of the industry average.

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