Today's Weak On High Volume Stock: Vimicro International (VIMC)

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

  • VIMC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $19.5 million.
  • VIMC has traded 215,163 shares today.
  • VIMC is trading at 10.32 times the normal volume for the stock at this time of day.
  • VIMC is trading at a new low 4.03% 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 VIMC:

Vimicro International Corporation, together with its subsidiaries, provides video surveillance solution and video processors in Mainland China, Hong Kong, and the United States. It operates through Video surveillance Product and Video Processor segments. Currently there is 1 analyst that rates Vimicro International a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Vimicro International has been 597,600 shares per day over the past 30 days. Vimicro International has a market cap of $212.9 million and is part of the technology sector and electronics industry. Shares are up 347.9% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Vimicro International 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:
  • VIMC's very impressive revenue growth greatly exceeded the industry average of 10.3%. Since the same quarter one year prior, revenues leaped by 116.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • VIMC's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.49, which illustrates the ability to avoid short-term cash problems.
  • 37.83% is the gross profit margin for VIMICRO INTL CORP -ADR which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 11.26% trails the industry average.
  • VIMICRO INTL CORP -ADR 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, VIMICRO INTL CORP -ADR swung to a loss, reporting -$0.30 versus $0.05 in the prior year. This year, the market expects an improvement in earnings ($0.07 versus -$0.30).
  • 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 Semiconductors & Semiconductor Equipment industry and the overall market, VIMICRO INTL CORP -ADR's return on equity significantly trails that of both the industry average and 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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