Trade-Ideas LLC identified

Meritage Homes

(

MTH

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

  • MTH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $15.0 million.
  • MTH has traded 51,208 shares today.
  • MTH is trading at 3.36 times the normal volume for the stock at this time of day.
  • MTH is trading at a new low 3.06% 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.

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

More details on MTH:

TheStreet Recommends

Meritage Homes Corporation designs and builds single-family detached homes in Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina, and Tennessee in the United States. The company operates through two segments, Homebuilding and Financial Services. MTH has a PE ratio of 13. Currently there are 2 analysts that rate Meritage Homes a buy, 2 analysts rate it a sell, and 4 rate it a hold.

The average volume for Meritage Homes has been 484,000 shares per day over the past 30 days. Meritage Homes has a market cap of $1.6 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.86 and a short float of 17.7% with 12.62 days to cover. Shares are up 12.2% year-to-date as of the close of trading on Monday.

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 Meritage Homes as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels, good cash flow from operations, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • MTH's revenue growth has slightly outpaced the industry average of 10.0%. Since the same quarter one year prior, revenues rose by 18.2%. 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 slightly increased to -$38.76 million or 9.83% when compared to the same quarter last year. In addition, MERITAGE HOMES CORP has also vastly surpassed the industry average cash flow growth rate of -72.49%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • MTH's debt-to-equity ratio of 0.97 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further.

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.