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

  • HYGS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.6 million.
  • HYGS has traded 52,495 shares today.
  • HYGS is trading at 7.50 times the normal volume for the stock at this time of day.
  • HYGS is trading at a new low 6.01% 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 HYGS:

Hydrogenics Corporation, together with its subsidiaries, designs, develops, and manufactures hydrogen generation products based on water electrolysis technology; and fuel cell products based on proton exchange membrane technology. Currently there are 2 analysts that rate Hydrogenics a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Hydrogenics has been 138,200 shares per day over the past 30 days. Hydrogenics has a market cap of $241.3 million and is part of the industrial goods sector and industrial industry. Shares are up 19% 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 Hydrogenics as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • Net operating cash flow has significantly decreased to -$4.80 million or 444.94% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for HYDROGENICS CORP is currently lower than what is desirable, coming in at 31.88%. Regardless of HYGS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -1.15% trails the industry average.
  • 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 Electrical Equipment industry and the overall market, HYDROGENICS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • HYGS's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.06, which illustrates the ability to avoid short-term cash problems.
  • This stock has increased by 108.67% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in HYGS do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

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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