Trade-Ideas: China Mobile Games And Entertainment Group (CMGE) 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 China Mobile Games and Entertainment Group ( CMGE) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified China Mobile Games and Entertainment Group as such a stock due to the following factors:

  • CMGE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $13.9 million.
  • CMGE has traded 99,136 shares today.
  • CMGE is trading at 3.61 times the normal volume for the stock at this time of day.
  • CMGE 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 CMGE:

China Mobile Games and Entertainment Group Limited, through its subsidiaries, develops and publishes mobile games primarily in the People's Republic of China. It provides social games and single-player games for mobiles. CMGE has a PE ratio of 132.0. Currently there is 1 analyst that rates China Mobile Games and Entertainment Group a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for China Mobile Games and Entertainment Group has been 350,000 shares per day over the past 30 days. China Mobile Games and Entertainment Group has a market cap of $575.3 million and is part of the technology sector and computer software & services industry. Shares are down 26.1% year-to-date as of the close of trading on Friday.

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 China Mobile Games and Entertainment Group as a hold. 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 and solid stock price performance. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Highlights from the ratings report include:
  • CMGE's very impressive revenue growth greatly exceeded the industry average of 11.5%. Since the same quarter one year prior, revenues leaped by 487.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • CMGE has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.87, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for CHINA MOBILE GAMES -ADR is rather high; currently it is at 62.90%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 16.12% trails the industry average.
  • In comparison to the other companies in the Software industry and the overall market, CHINA MOBILE GAMES -ADR's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Net operating cash flow has significantly decreased to -$3.79 million or 777.99% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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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