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

  • THRM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $24.7 million.
  • THRM has traded 513,097 shares today.
  • THRM is trading at 12.26 times the normal volume for the stock at this time of day.
  • THRM is trading at a new low 8.00% 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 THRM:

Gentherm Incorporated designs, develops, and manufactures thermal management technologies and cable systems worldwide. It operates through three segments: Climate Controlled Seats (CCS), Advanced Technology, and W.E.T. THRM has a PE ratio of 32.0. Currently there are 4 analysts that rate Gentherm a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Gentherm has been 584,800 shares per day over the past 30 days. Gentherm has a market cap of $1.7 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 2.01 and a short float of 3.4% with 2.17 days to cover. Shares are up 74.8% year-to-date as of the close of trading on Monday.

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 Gentherm 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 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:
  • The revenue growth came in higher than the industry average of 9.0%. Since the same quarter one year prior, revenues rose by 28.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.31, 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 1.21, which illustrates the ability to avoid short-term cash problems.
  • GENTHERM 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 two years. We feel that this trend should continue. During the past fiscal year, GENTHERM INC increased its bottom line by earning $0.94 versus $0.39 in the prior year. This year, the market expects an improvement in earnings ($1.80 versus $0.94).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Auto Components industry. The net income increased by 198.1% when compared to the same quarter one year prior, rising from $5.51 million to $16.42 million.
  • Net operating cash flow has significantly increased by 67.85% to $27.52 million when compared to the same quarter last year. In addition, GENTHERM INC has also vastly surpassed the industry average cash flow growth rate of -23.50%.

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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