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

Violin Memory

(

VMEM

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

  • VMEM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.6 million.
  • VMEM has traded 190,609 shares today.
  • VMEM is trading at 3.79 times the normal volume for the stock at this time of day.
  • VMEM is trading at a new high 7.30% 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in VMEM with the Ticky from Trade-Ideas. See the FREE profile for VMEM NOW at Trade-Ideas

More details on VMEM:

Violin Memory, Inc. develops and supplies memory-based storage systems to bring storage performance in line with high-speed applications, servers, and networks worldwide. Currently there is 1 analyst that rates Violin Memory a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Violin Memory has been 1.2 million shares per day over the past 30 days. Violin Memory has a market cap of $209.3 million and is part of the technology sector and computer hardware industry. Shares are down 51.4% year-to-date as of the close of trading on Wednesday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Violin Memory as a

sell

. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and generally high debt management risk.

Highlights from the ratings report include:

  • 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 Computers & Peripherals industry and the overall market, VIOLIN MEMORY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to -$19.18 million or 12.74% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The debt-to-equity ratio is very high at 276.17 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 2.94, which shows the ability to cover short-term cash needs.
  • VMEM'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 46.77%, 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 company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Computers & Peripherals industry average, but is greater than that of the S&P 500. The net income increased by 12.1% when compared to the same quarter one year prior, going from -$30.14 million to -$26.50 million.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.