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

  • STX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $184.5 million.
  • STX has traded 13.1 million shares today.
  • STX is trading at 999999.00 times the normal volume for the stock at this time of day.
  • STX is trading at a new low 3.05% 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 STX:

Seagate Technology Public Limited Company designs, manufactures, markets, and sells hard disk drives for enterprise storage, client compute, and client non-compute market applications worldwide. The stock currently has a dividend yield of 3.2%. STX has a PE ratio of 7.6. Currently there are 5 analysts that rate Seagate Technology a buy, 2 analysts rate it a sell, and 15 rate it a hold.

The average volume for Seagate Technology has been 4.5 million shares per day over the past 30 days. Seagate Technology has a market cap of $16.8 billion and is part of the technology sector and computer hardware industry. The stock has a beta of 2.95 and a short float of 5% with 3.85 days to cover. Shares are up 53.9% year to date as of the close of trading on Tuesday.

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 Seagate Technology as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, notable return on equity and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, STX's share price has jumped by 70.35%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, STX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • 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 Computers & Peripherals industry and the overall market, SEAGATE TECHNOLOGY PLC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The revenue fell significantly faster than the industry average of 10.2%. Since the same quarter one year prior, revenues fell by 20.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • STX's debt-to-equity ratio of 0.75 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.49 is sturdy.
  • SEAGATE TECHNOLOGY PLC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SEAGATE TECHNOLOGY PLC increased its bottom line by earning $6.45 versus $1.10 in the prior year. For the next year, the market is expecting a contraction of 18.1% in earnings ($5.28 versus $6.45).

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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