Trade-Ideas: Yahoo (YHOO) Is Today's Weak On High Relative Volume Stock

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 or Stephanie Link.

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

  • YHOO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $653.2 million.
  • YHOO has traded 5.2 million shares today.
  • YHOO is trading at 4.50 times the normal volume for the stock at this time of day.
  • YHOO is trading at a new low 3.00% 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 YHOO:

Yahoo! Inc., a technology company, provides search, content, and communication tools on the Web and on mobile devices worldwide. YHOO has a PE ratio of 8.6. Currently there are 11 analysts that rate Yahoo a buy, 1 analyst rates it a sell, and 16 rate it a hold.

The average volume for Yahoo has been 15.9 million shares per day over the past 30 days. Yahoo has a market cap of $29.1 billion and is part of the technology sector and internet industry. The stock has a beta of 0.83 and a short float of 2.8% with 1.17 days to cover. Shares are up 49% year to date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Yahoo as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income, notable return on equity, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 52.17% and other important driving factors, this stock has surged by 71.13% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, YHOO should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 36.3% when compared to the same quarter one year prior, rising from $286.34 million to $390.29 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Internet Software & Services industry and the overall market, YAHOO INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for YAHOO INC is currently very high, coming in at 83.41%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 34.22% significantly outperformed against the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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