Trade-Ideas LLC identified

Westlake Chemical

(

WLK

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

  • WLK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $35.5 million.
  • WLK has traded 84,260 shares today.
  • WLK is trading at 3.09 times the normal volume for the stock at this time of day.
  • WLK is trading at a new low 5.01% 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 WLK:

Westlake Chemical Corporation manufactures and markets basic chemicals, vinyls, polymers, and fabricated building products. It operates through two segments, Olefins and Vinyls. The stock currently has a dividend yield of 1.2%. WLK has a PE ratio of 11. Currently there are 4 analysts that rate Westlake Chemical a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Westlake Chemical has been 911,500 shares per day over the past 30 days. Westlake Chemical has a market cap of $7.9 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 1.45 and a short float of 5.1% with 2.51 days to cover. Shares are down 1.9% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Westlake Chemical as a

buy

. The company's strengths can be seen in multiple areas, such as its robust 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 shows low profit margins.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 14.8%. Since the same quarter one year prior, revenues rose by 18.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • WLK's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.04, which clearly demonstrates the ability to cover short-term cash needs.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 21.0% when compared to the same quarter one year prior, going from $169.44 million to $205.10 million.
  • Net operating cash flow has increased to $244.80 million or 11.40% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -21.70%.

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