Weak On High Volume: Cliffs Natural Resources (CLF)

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

  • CLF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $98.8 million.
  • CLF has traded 880,674 shares today.
  • CLF is trading at 2.07 times the normal volume for the stock at this time of day.
  • CLF is trading at a new low 4.07% 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 CLF:

Cliffs Natural Resources Inc., a mining and natural resources company, produces iron ore and metallurgical coal. The stock currently has a dividend yield of 4.7%. CLF has a PE ratio of 40.8. Currently there are 3 analysts that rate Cliffs Natural Resources a buy, 3 analysts rate it a sell, and 8 rate it a hold.

The average volume for Cliffs Natural Resources has been 6.3 million shares per day over the past 30 days. Cliffs Natural has a market cap of $1.9 billion and is part of the basic materials sector and metals & mining industry. The stock has a beta of 2.70 and a short float of 39.1% with 6.62 days to cover. Shares are down 52.2% year-to-date as of the close of trading on Wednesday.

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 Cliffs Natural Resources as a sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, unimpressive growth in net income, poor profit margins, weak operating cash flow and generally high debt management risk.

Highlights from the ratings report include:
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 36.70%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 101.21% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • 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 Metals & Mining industry. The net income has significantly decreased by 92.5% when compared to the same quarter one year ago, falling from $146.00 million to $10.90 million.
  • The gross profit margin for CLIFFS NATURAL RESOURCES INC is rather low; currently it is at 21.56%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.99% significantly trails the industry average.
  • Net operating cash flow has significantly decreased to -$41.90 million or 110.11% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • CLF's debt-to-equity ratio of 0.61 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that CLF's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.57 is low and demonstrates weak liquidity.

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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