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

Rent-A-Center

(

RCII

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

  • RCII has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $19.1 million.
  • RCII has traded 183,530 shares today.
  • RCII is trading at 10.68 times the normal volume for the stock at this time of day.
  • RCII is trading at a new low 3.34% 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 RCII:

Rent-A-Center, Inc., together with its subsidiaries, leases household durable goods to customers on a rent-to-own basis. The company operates in four segments: Core U.S., Acceptance Now, Mexico, and Franchising. The stock currently has a dividend yield of 3.6%. RCII has a PE ratio of 15. Currently there are 4 analysts that rate Rent-A-Center a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Rent-A-Center has been 842,700 shares per day over the past 30 days. Rent-A-Center has a market cap of $1.4 billion and is part of the services sector and diversified services industry. The stock has a beta of 0.83 and a short float of 18% with 10.51 days to cover. Shares are down 27.5% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Rent-A-Center 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, attractive valuation levels, good cash flow from operations and increase in net income. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.8%. Since the same quarter one year prior, revenues slightly increased by 5.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.64, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
  • Net operating cash flow has significantly increased by 89.93% to $228.04 million when compared to the same quarter last year. In addition, RENT-A-CENTER INC has also vastly surpassed the industry average cash flow growth rate of 30.50%.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Specialty Retail industry average. The net income increased by 0.1% when compared to the same quarter one year prior, going from $27.27 million to $27.30 million.

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