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

  • YGE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $11.9 million.
  • YGE has traded 2.2 million shares today.
  • YGE is trading at 5.57 times the normal volume for the stock at this time of day.
  • YGE is trading at a new low 9.27% 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 YGE:

Yingli Green Energy Holding Company Limited, together with its subsidiaries, designs, develops, manufacture, markets, sells, and installs photovoltaic products in the People's Republic of China. Currently there is 1 analyst that rates Yingli Green Energy a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Yingli Green Energy has been 4.2 million shares per day over the past 30 days. Yingli Green Energy has a market cap of $592.6 million and is part of the technology sector and electronics industry. Shares are down 29.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Yingli Green Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 105.47 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, YGE has a quick ratio of 0.50, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, YINGLI GREEN ENERGY HLDGS CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for YINGLI GREEN ENERGY HLDGS CO is rather low; currently it is at 15.68%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, YGE's net profit margin of -12.72% significantly underperformed when compared to the industry average.
  • YGE has underperformed the S&P 500 Index, declining 10.95% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • YINGLI GREEN ENERGY HLDGS CO has improved earnings per share by 44.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, YINGLI GREEN ENERGY HLDGS CO continued to lose money by earning -$2.05 versus -$3.13 in the prior year. This year, the market expects an improvement in earnings (-$0.48 versus -$2.05).

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