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

AmTrust Financial Services

(

AFSI

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

  • AFSI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $36.7 million.
  • AFSI has traded 63,231 shares today.
  • AFSI is trading at 3.05 times the normal volume for the stock at this time of day.
  • AFSI 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 AFSI:

AmTrust Financial Services, Inc., through its subsidiaries, underwrites and provides property and casualty insurance in the United States and internationally. It operates in three segments: Small Commercial Business, Specialty Risk and Extended Warranty, and Specialty Program. The stock currently has a dividend yield of 1.8%. AFSI has a PE ratio of 12. Currently there are 4 analysts that rate AmTrust Financial Services a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for AmTrust Financial Services has been 460,600 shares per day over the past 30 days. AmTrust Financial Services has a market cap of $5.4 billion and is part of the financial sector and insurance industry. The stock has a beta of 1.25 and a short float of 15.6% with 9.58 days to cover. Shares are up 17.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates AmTrust Financial Services as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and notable return on equity. We feel its 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 14.0%. Since the same quarter one year prior, revenues rose by 10.7%. 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.
  • Although AFSI's debt-to-equity ratio of 0.28 is very low, it is currently higher than that of the industry average.
  • Compared to its closing price of one year ago, AFSI's share price has jumped by 54.05%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, AFSI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • AMTRUST FINANCIAL SERVICES's earnings per share declined by 36.8% 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, AMTRUST FINANCIAL SERVICES increased its bottom line by earning $5.45 versus $3.49 in the prior year. This year, the market expects an improvement in earnings ($5.56 versus $5.45).
  • 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 Insurance industry and the overall market, AMTRUST FINANCIAL SERVICES's return on equity exceeds that of both the industry average and the S&P 500.

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