Weak On High Volume: HollyFrontier (HFC)

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

  • HFC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $76.2 million.
  • HFC has traded 245,349 shares today.
  • HFC is trading at 3.88 times the normal volume for the stock at this time of day.
  • HFC 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 HFC:

HollyFrontier Corporation operates as an independent petroleum refiner in the United States. It produces high-value refined products, such as gasoline, diesel fuel, jet fuel, specialty lubricant products, liquid petroleum gas, fuel oil, and specialty and modified asphalt. The stock currently has a dividend yield of 2.6%. HFC has a PE ratio of 20.9. Currently there are 4 analysts that rate HollyFrontier a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for HollyFrontier has been 2.3 million shares per day over the past 30 days. HollyFrontier has a market cap of $9.9 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.92 and a short float of 6.4% with 6.54 days to cover. Shares are down 2.3% 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 HollyFrontier as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • HFC's revenue growth has slightly outpaced the industry average of 3.5%. Since the same quarter one year prior, revenues slightly increased by 1.4%. 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.
  • HFC's debt-to-equity ratio is very low at 0.17 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 1.32, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has significantly increased by 60.90% to $326.55 million when compared to the same quarter last year. In addition, HOLLYFRONTIER CORP has also vastly surpassed the industry average cash flow growth rate of -5.22%.
  • 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.

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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