Trade-Ideas LLC identified

Vipshop Holdings

(

VIPS

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

  • VIPS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $70.3 million.
  • VIPS has traded 1.7 million shares today.
  • VIPS is trading at 2.34 times the normal volume for the stock at this time of day.
  • VIPS is trading at a new low 4.02% 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 VIPS:

Vipshop Holdings Limited, through its subsidiaries, operates as an online discount retailer for various brands in the People's Republic of China. VIPS has a PE ratio of 34. Currently there are 4 analysts that rate Vipshop Holdings a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Vipshop Holdings has been 8.1 million shares per day over the past 30 days. Vipshop has a market cap of $6.8 billion and is part of the services sector and retail industry. Shares are down 25.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Vipshop Holdings as a

hold

. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, robust revenue growth and notable return on equity. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • VIPSHOP HOLDINGS LTD -ADR has improved earnings per share by 20.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, VIPSHOP HOLDINGS LTD -ADR increased its bottom line by earning $0.40 versus $0.23 in the prior year. This year, the market expects an improvement in earnings ($4.37 versus $0.40).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 42.9%. Since the same quarter one year prior, revenues rose by 35.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.99, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that VIPS's debt-to-equity ratio is low, the quick ratio, which is currently 0.52, displays a potential problem in covering short-term cash needs.
  • VIPS'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 50.26%, 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The gross profit margin for VIPSHOP HOLDINGS LTD -ADR is rather low; currently it is at 24.29%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 3.89% is above that of the industry average.

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