Weak On High Volume: Solazyme (SZYM)

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

  • SZYM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $7.7 million.
  • SZYM has traded 117,020 shares today.
  • SZYM is trading at 3.83 times the normal volume for the stock at this time of day.
  • SZYM is trading at a new low 3.05% 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 SZYM:

Solazyme, Inc. manufactures and sells renewable oils and other bioproducts. Its proprietary technology transforms a range of plant-based sugars into triglyceride oils and other bioproducts. Currently there are 4 analysts that rate Solazyme a buy, 1 analyst rates it a sell, and none rate it a hold.

The average volume for Solazyme has been 970,900 shares per day over the past 30 days. Solazyme has a market cap of $692.5 million and is part of the basic materials sector and energy industry. The stock has a beta of 1.29 and a short float of 26% with 21.16 days to cover. Shares are down 19.2% year-to-date as of the close of trading on Friday.

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 Solazyme as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally high debt management risk and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 66.2% when compared to the same quarter one year ago, falling from -$25.83 million to -$42.92 million.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, SOLAZYME INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to -$21.90 million or 14.97% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, SOLAZYME INC has marginally lower results.
  • The debt-to-equity ratio of 1.25 is relatively high when compared with the industry average, suggesting a need for better debt level management. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 9.95, which shows the ability to cover short-term cash needs.
  • The share price of SOLAZYME INC has not done very well: it is down 20.76% 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.

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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