Weak On High Volume: Bitauto Holdings (BITA)

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

  • BITA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $159.5 million.
  • BITA has traded 373,673 shares today.
  • BITA is trading at 2.52 times the normal volume for the stock at this time of day.
  • BITA is trading at a new low 3.04% 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 BITA:

Bitauto Holdings Limited provides Internet content and marketing services for the automotive industry primarily in the People's Republic of China. BITA has a PE ratio of 146.0. Currently there are 2 analysts that rate Bitauto Holdings a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Bitauto Holdings has been 1.6 million shares per day over the past 30 days. Bitauto has a market cap of $3.4 billion and is part of the technology sector and internet industry. Shares are up 147.2% year-to-date as of the close of trading on Tuesday.

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 Bitauto Holdings 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, notable return on equity, expanding profit margins and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:
  • BITA's very impressive revenue growth is slightly higher than the industry average of 43.9%. Since the same quarter one year prior, revenues leaped by 51.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • BITA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.85, which clearly demonstrates the ability to cover short-term cash needs.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Internet Software & Services industry and the overall market, BITAUTO HOLDINGS LTD -ADR's return on equity exceeds that of both the industry average and the S&P 500.
  • BITAUTO HOLDINGS LTD -ADR 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 two years. We feel that this trend should continue. During the past fiscal year, BITAUTO HOLDINGS LTD -ADR increased its bottom line by earning $0.95 versus $0.53 in the prior year. This year, the market expects an improvement in earnings ($1.68 versus $0.95).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 104.7% when compared to the same quarter one year prior, rising from $9.13 million to $18.69 million.

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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