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

Aruba Networks

(

ARUN

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

  • ARUN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $26.7 million.
  • ARUN has traded 549,361 shares today.
  • ARUN is trading at 7.37 times the normal volume for the stock at this time of day.
  • ARUN is trading at a new low 6.03% 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 ARUN:

Aruba Networks, Inc. provides enterprise mobility solutions worldwide. Currently there are 13 analysts that rate Aruba Networks a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Aruba Networks has been 1.9 million shares per day over the past 30 days. Aruba has a market cap of $2.0 billion and is part of the technology sector and computer hardware industry. The stock has a beta of 2.47 and a short float of 9.6% with 6.35 days to cover. Shares are down 2.5% 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 Aruba Networks as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 5.6%. Since the same quarter one year prior, revenues rose by 29.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ARUN has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, ARUN has a quick ratio of 1.73, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for ARUBA NETWORKS INC is currently very high, coming in at 74.17%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, ARUN's net profit margin of 1.31% significantly trails the industry average.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Communications Equipment industry and the overall market, ARUBA NETWORKS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • ARUN has underperformed the S&P 500 Index, declining 5.10% 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.

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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