Trade-Ideas: Pacific Ethanol (PEIX) Is Today's Strong On High Relative Volume Stock

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

  • PEIX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $37.7 million.
  • PEIX has traded 298,010 shares today.
  • PEIX is trading at 2.51 times the normal volume for the stock at this time of day.
  • PEIX is trading at a new high 3.13% 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 PEIX:

Pacific Ethanol, Inc. produces and markets low-carbon renewable fuels in the United States. It sells ethanol to gasoline refining and distribution companies. PEIX has a PE ratio of 32.6. Currently there is 1 analyst that rates Pacific Ethanol a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Pacific Ethanol has been 1.3 million shares per day over the past 30 days. Pacific Ethanol has a market cap of $397.1 million and is part of the basic materials sector and chemicals industry. The stock has a beta of 2.88 and a short float of 14.7% with 1.19 days to cover. Shares are up 213.8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Pacific Ethanol as a buy. 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, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 3.1%. Since the same quarter one year prior, revenues rose by 37.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • PEIX's debt-to-equity ratio is very low at 0.30 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, PEIX has a quick ratio of 2.07, which demonstrates the ability of the company to cover short-term liquidity needs.
  • PACIFIC ETHANOL INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, PACIFIC ETHANOL INC continued to lose money by earning -$0.39 versus -$2.70 in the prior year. This year, the market expects an improvement in earnings ($3.12 versus -$0.39).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 1381.6% when compared to the same quarter one year prior, rising from $1.05 million to $15.57 million.
  • Net operating cash flow has significantly increased by 950.35% to $28.45 million when compared to the same quarter last year. In addition, PACIFIC ETHANOL INC has also vastly surpassed the industry average cash flow growth rate of -5.24%.

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