Today's Weak On High Volume Stock: CalAmp (CAMP)

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

  • CAMP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $9.9 million.
  • CAMP has traded 106,522 shares today.
  • CAMP is trading at 4.69 times the normal volume for the stock at this time of day.
  • CAMP is trading at a new low 4.09% 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 CAMP:

CalAmp Corp. develops and markets wireless communications products and solutions for various applications worldwide. It operates in two segments, Wireless DataCom and Satellite. CAMP has a PE ratio of 54.8. Currently there are 4 analysts that rate CalAmp a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for CalAmp has been 761,100 shares per day over the past 30 days. CalAmp has a market cap of $689.8 million and is part of the technology sector and telecommunications industry. The stock has a beta of 0.77 and a short float of 8.1% with 4.42 days to cover. Shares are down 32.7% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates CalAmp 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, increase in net income, 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 disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 4.0%. Since the same quarter one year prior, revenues slightly increased by 9.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CAMP's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CAMP has a quick ratio of 1.77, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 59.8% when compared to the same quarter one year prior, rising from $1.69 million to $2.69 million.
  • Net operating cash flow has increased to $7.33 million or 26.76% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 4.07%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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