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

WisdomTree Investments

(

WETF

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

  • WETF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $38.5 million.
  • WETF has traded 189,613 shares today.
  • WETF is trading at 2.52 times the normal volume for the stock at this time of day.
  • WETF is trading at a new low 3.02% 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 WETF:

WisdomTree Investments, Inc., through its subsidiaries, operates as an exchange-traded funds (ETFs) sponsor and asset manager. It offers ETFs in equities, currency, fixed income, and alternatives asset classes. The stock currently has a dividend yield of 1.5%. WETF has a PE ratio of 49.4. Currently there are 6 analysts that rate WisdomTree Investments a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for WisdomTree Investments has been 1.8 million shares per day over the past 30 days. WisdomTree Investments has a market cap of $2.9 billion and is part of the financial sector and financial services industry. The stock has a beta of 3.45 and a short float of 5.8% with 3.22 days to cover. Shares are up 35.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates WisdomTree Investments as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 13.2%. Since the same quarter one year prior, revenues rose by 14.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $25.98 million or 15.93% when compared to the same quarter last year. In addition, WISDOMTREE INVESTMENTS INC has also modestly surpassed the industry average cash flow growth rate of 5.95%.
  • Compared to its closing price of one year ago, WETF's share price has jumped by 57.37%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • WISDOMTREE INVESTMENTS INC's earnings per share declined by 41.7% 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, WISDOMTREE INVESTMENTS INC increased its bottom line by earning $0.45 versus $0.38 in the prior year. This year, the market expects an improvement in earnings ($0.55 versus $0.45).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Capital Markets industry and the overall market, WISDOMTREE INVESTMENTS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.

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