Strong On High Relative Volume: ChinaNet Online Holdings (CNET)

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 ChinaNet Online Holdings ( CNET) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified ChinaNet Online Holdings as such a stock due to the following factors:

  • CNET has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $7.3 million.
  • CNET has traded 6.3 million shares today.
  • CNET is trading at 1080.17 times the normal volume for the stock at this time of day.
  • CNET is trading at a new high 54.08% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 CNET:

ChinaNet Online Holdings, Inc., through its subsidiaries, provides business-to-businesses Internet services for small and medium enterprises (SMEs) sales networks in the People's Republic of China.

The average volume for ChinaNet Online Holdings has been 168,200 shares per day over the past 30 days. ChinaNet Online has a market cap of $22.9 million and is part of the services sector and media industry. Shares are up 133.3% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates ChinaNet Online Holdings as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • CHINANET ONLINE HOLDINGS has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, CHINANET ONLINE HOLDINGS swung to a loss, reporting -$0.01 versus $0.13 in the prior year.
  • 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 Media industry. The net income has significantly decreased by 406.7% when compared to the same quarter one year ago, falling from $0.43 million to -$1.33 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 Media industry and the overall market, CHINANET ONLINE HOLDINGS's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CHINANET ONLINE HOLDINGS is rather low; currently it is at 16.37%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -12.84% is significantly below that of the industry average.
  • Net operating cash flow has declined marginally to $0.41 million or 0.97% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, CHINANET ONLINE HOLDINGS has marginally lower results.

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