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 or Stephanie Link.

Trade-Ideas LLC identified

Violin Memory

(

VMEM

) as a weak 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 $2.8 million.
  • VMEM has traded 138,550 shares today.
  • VMEM is trading at 6.90 times the normal volume for the stock at this time of day.
  • VMEM is trading at a new low 4.04% 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 VMEM:

TheStreet Recommends

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 are 2 analysts that rate Violin Memory a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Violin Memory has been 625,400 shares per day over the past 30 days. Violin Memory has a market cap of $373.4 million and is part of the technology sector and computer hardware industry. Shares are down 25.1% year-to-date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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 generally disappointing historical performance in the stock itself and generally high debt management risk.

Highlights from the ratings report include:

  • VMEM has underperformed the S&P 500 Index, declining 12.50% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The debt-to-equity ratio is very high at 6.07 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 3.13, which shows the ability to cover short-term cash needs.
  • 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 17.2% when compared to the same quarter one year prior, going from -$56.52 million to -$46.82 million.
  • The revenue fell significantly faster than the industry average of 31.5%. Since the same quarter one year prior, revenues fell by 26.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for VIOLIN MEMORY INC is rather high; currently it is at 60.03%. Regardless of VMEM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VMEM's net profit margin of -228.17% significantly underperformed when compared to the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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