Pan American Silver (PAAS) Weak On High Volume Today

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

  • PAAS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $12.0 million.
  • PAAS has traded 156,285 shares today.
  • PAAS is trading at 2.81 times the normal volume for the stock at this time of day.
  • PAAS is trading at a new low 3.01% 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 PAAS:

Pan American Silver Corp., together with its subsidiaries, operates and develops, and explores for silver producing properties and assets in Mexico, Peru, Argentina, and Bolivia. The company also produces and sells gold, zinc, lead, and copper. The stock currently has a dividend yield of 3.7%. Currently there is 1 analyst that rates Pan American Silver a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Pan American Silver has been 1.1 million shares per day over the past 30 days. Pan American has a market cap of $2.0 billion and is part of the basic materials sector and metals & mining industry. Shares are up 15% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Pan American Silver as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Metals & Mining industry and the overall market, PAN AMERICAN SILVER CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for PAN AMERICAN SILVER CORP is rather low; currently it is at 24.17%. Regardless of PAAS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, PAAS's net profit margin of -2.72% significantly underperformed when compared to the industry average.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Metals & Mining industry average, but is greater than that of the S&P 500. The net income increased by 97.1% when compared to the same quarter one year prior, rising from -$186.54 million to -$5.47 million.
  • 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, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • PAN AMERICAN SILVER CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PAN AMERICAN SILVER CORP swung to a loss, reporting -$2.98 versus $0.57 in the prior year. This year, the market expects an improvement in earnings ($0.19 versus -$2.98).

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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