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

PennyMac Mortgage Investment

(

PMT

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

  • PMT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $9.8 million.
  • PMT has traded 373,969 shares today.
  • PMT is trading at 10.70 times the normal volume for the stock at this time of day.
  • PMT is trading at a new low 11.05% 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 PMT:

PennyMac Mortgage Investment Trust, a specialty finance company, invests primarily in residential mortgage loans and mortgage-related assets in the United States. The company operates through two segments, Correspondent Production and Investment Activities. The stock currently has a dividend yield of 13.8%. PMT has a PE ratio of 9. Currently there are 5 analysts that rate PennyMac Mortgage Investment a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for PennyMac Mortgage Investment has been 746,700 shares per day over the past 30 days. PennyMac Mortgage Investment has a market cap of $1.3 billion and is part of the financial sector and real estate industry. The stock has a beta of 0.16 and a short float of 2.2% with 2.57 days to cover. Shares are down 16.3% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates PennyMac Mortgage Investment as a

hold

. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:

  • 49.71% is the gross profit margin for PENNYMAC MORTGAGE INVEST TR which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, PMT's net profit margin of 11.84% is significantly lower than the industry average.
  • 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. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, PENNYMAC MORTGAGE INVEST TR's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$753.13 million or 764.70% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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