Strong On High Relative Volume: Youku Tudou (YOKU)

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 Youku Tudou ( YOKU) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Youku Tudou as such a stock due to the following factors:

  • YOKU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $71.9 million.
  • YOKU has traded 1.3 million shares today.
  • YOKU is trading at 7.66 times the normal volume for the stock at this time of day.
  • YOKU is trading at a new high 5.04% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 YOKU:

Youku Tudou Inc. operates as an Internet television company in the People's Republic of China. Its Internet television platform enables consumers to search, view, and share video content across various devices. Currently there are 3 analysts that rate Youku Tudou a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Youku Tudou has been 3.0 million shares per day over the past 30 days. Youku Tudou has a market cap of $4.1 billion and is part of the technology sector and internet industry. Shares are down 37.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Youku Tudou as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • YOUKU TUDOU INC's earnings per share declined by 30.0% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, YOUKU TUDOU INC reported poor results of -$0.58 versus -$0.52 in the prior year. For the next year, the market is expecting a contraction of 496.6% in earnings (-$3.46 versus -$0.58).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 51.3% when compared to the same quarter one year ago, falling from -$17.56 million to -$26.58 million.
  • The gross profit margin for YOUKU TUDOU INC is rather low; currently it is at 21.75%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -17.17% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$24.93 million or 141.47% 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 share price of YOUKU TUDOU INC has not done very well: it is down 13.08% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.

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