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

  • AXP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $426.1 million.
  • AXP has traded 1.2 million shares today.
  • AXP is trading at 2.49 times the normal volume for the stock at this time of day.
  • AXP is trading at a new low 3.01% 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 AXP:

American Express Company provides charge and credit payment card products and travel-related services to customers worldwide. The stock currently has a dividend yield of 1.2%. AXP has a PE ratio of 19.7. Currently there are 7 analysts that rate American Express a buy, 1 analyst rates it a sell, and 12 rate it a hold.

The average volume for American Express has been 5.4 million shares per day over the past 30 days. American Express has a market cap of $86.0 billion and is part of the financial sector and financial services industry. The stock has a beta of 0.99 and a short float of 1.3% with 2.16 days to cover. Shares are up 33.6% 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 American Express as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, solid stock price performance, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 4.2%. Since the same quarter one year prior, revenues slightly increased by 2.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Net operating cash flow has significantly increased by 119.90% to $7,547.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 109.08%.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 32.47% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • AMERICAN EXPRESS CO has improved earnings per share by 7.5% 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, AMERICAN EXPRESS CO reported lower earnings of $3.87 versus $4.08 in the prior year. This year, the market expects an improvement in earnings ($4.79 versus $3.87).
  • The net income growth from the same quarter one year ago has exceeded that of the Consumer Finance industry average, but is less than that of the S&P 500. The net income increased by 1.9% when compared to the same quarter one year prior, going from $1,256.00 million to $1,280.00 million.

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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