Trade-Ideas: Tim Participacoes (TSU) Is Today's Weak 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 Tim Participacoes ( TSU) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Tim Participacoes as such a stock due to the following factors:

  • TSU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $45.3 million.
  • TSU has traded 171,147 shares today.
  • TSU is trading at 2.05 times the normal volume for the stock at this time of day.
  • TSU is trading at a new low 3.00% 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 TSU:

TIM Participac es S.A., through its subsidiaries, provides telecommunication services in Brazil. The company offers mobile, fixed, and long distance telephony; data transmission; and Internet services. The stock currently has a dividend yield of 2.7%. TSU has a PE ratio of 18.3. Currently there are 3 analysts that rate Tim Participacoes a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Tim Participacoes has been 1.2 million shares per day over the past 30 days. Tim Participacoes has a market cap of $13.4 billion and is part of the technology sector and telecommunications industry. Shares are up 5.4% year-to-date as of the close of trading on Friday.

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 Tim Participacoes as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in net income and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth significantly trails the industry average of 60.8%. Since the same quarter one year prior, revenues slightly increased by 8.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • The current debt-to-equity ratio, 0.43, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.43, which illustrates the ability to avoid short-term cash problems.
  • TIM PARTICIPACOES SA reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, TIM PARTICIPACOES SA reported lower earnings of $1.32 versus $1.48 in the prior year. This year, the market expects an improvement in earnings ($1.36 versus $1.32).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Wireless Telecommunication Services industry average, but is greater than that of the S&P 500. The net income increased by 4.9% when compared to the same quarter one year prior, going from $161.86 million to $169.87 million.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

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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