Today's Weak On High Volume Stock: Knightsbridge Tankers (VLCCF)

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

  • VLCCF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $7.0 million.
  • VLCCF has traded 123,720 shares today.
  • VLCCF is trading at 3.72 times the normal volume for the stock at this time of day.
  • VLCCF is trading at a new low 4.02% 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 VLCCF:

Knightsbridge Tankers Limited, a shipping company, is engaged in the seaborne transportation of dry bulk cargoes worldwide. As of May 09, 2014, it owned and operated a fleet of five Capesize dry bulk carriers. The company was founded in 1996 and is based in Hamilton, Bermuda. The stock currently has a dividend yield of 7%. VLCCF has a PE ratio of 82.2. Currently there is 1 analyst that rates Knightsbridge Tankers a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Knightsbridge Tankers has been 587,800 shares per day over the past 30 days. Knightsbridge Tankers has a market cap of $565.4 million and is part of the services sector and transportation industry. The stock has a beta of 1.22 and a short float of 4.8% with 3.85 days to cover. Shares are up 24.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Knightsbridge Tankers as a hold. 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 and solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:
  • VLCCF's very impressive revenue growth greatly exceeded the industry average of 9.7%. Since the same quarter one year prior, revenues leaped by 168.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • VLCCF's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • KNIGHTSBRIDGE TANKERS LTD 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, KNIGHTSBRIDGE TANKERS LTD reported lower earnings of $0.11 versus $0.25 in the prior year. This year, the market expects an improvement in earnings ($0.24 versus $0.11).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Marine industry and the overall market on the basis of return on equity, KNIGHTSBRIDGE TANKERS LTD underperformed against that of the industry average and is significantly less than that of the S&P 500.

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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