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

Roundys

(

RNDY

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

  • RNDY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.8 million.
  • RNDY has traded 89,400 shares today.
  • RNDY is trading at 5.21 times the normal volume for the stock at this time of day.
  • RNDY is trading at a new low 5.06% 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.

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More details on RNDY:

Roundy's, Inc. operates retail grocery stores. Currently there are no analysts that rate Roundys a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Roundys has been 401,100 shares per day over the past 30 days. Roundys has a market cap of $282.4 million and is part of the services sector and retail industry. The stock has a beta of 1.48 and a short float of 5.3% with 3.06 days to cover. Shares are up 22.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Roundys as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Food & Staples Retailing industry. The net income has significantly decreased by 29.1% when compared to the same quarter one year ago, falling from $8.65 million to $6.14 million.
  • The gross profit margin for ROUNDY'S INC is currently lower than what is desirable, coming in at 27.24%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.57% trails that of the industry average.
  • Net operating cash flow has decreased to $31.47 million or 23.39% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • RNDY's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 29.78%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • ROUNDY'S INC reported significant earnings per share improvement 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, ROUNDY'S INC swung to a loss, reporting -$5.25 versus $0.57 in the prior year. This year, the market expects an improvement in earnings (-$0.10 versus -$5.25).

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