PGT (PGTI) Highlighted As Weak On High Volume

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

  • PGTI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.6 million.
  • PGTI has traded 51,361 shares today.
  • PGTI is trading at 2.16 times the normal volume for the stock at this time of day.
  • PGTI is trading at a new low 3.08% 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 PGTI:

PGT, Inc. manufactures and supplies residential impact-resistant windows and doors. The company offers window and door products, including heavy-duty aluminum or vinyl frames with laminated glass to provide protection from hurricane-force winds and wind-borne debris. PGTI has a PE ratio of 23.3. Currently there are 3 analysts that rate PGT a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for PGT has been 512,800 shares per day over the past 30 days. PGT has a market cap of $495.7 million and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 0.95 and a short float of 2.6% with 3.75 days to cover. Shares are up 2.6% year-to-date as of the close of trading on Wednesday.

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 PGT as a buy. 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, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 2.5%. Since the same quarter one year prior, revenues rose by 29.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Even though the current debt-to-equity ratio is 1.15, it is still below the industry average, suggesting that this level of debt is acceptable within the Building Products industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.62 is very high and demonstrates very strong liquidity.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • 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 Building Products industry and the overall market, PGT INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • PGT INC's earnings per share declined by 15.8% in the most recent quarter compared to 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, PGT INC increased its bottom line by earning $0.52 versus $0.17 in the prior year. For the next year, the market is expecting a contraction of 10.6% in earnings ($0.47 versus $0.52).

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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