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

  • TRLA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $39.1 million.
  • TRLA has traded 97,059 shares today.
  • TRLA is trading at 3.09 times the normal volume for the stock at this time of day.
  • TRLA is trading at a new low 3.02% 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 TRLA:

Trulia, Inc. provides tools to research homes and neighborhoods for consumers through Web and mobile applications. The company, through its tools, also enables real estate professionals to market their listings. Currently there is 1 analyst that rates Trulia a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Trulia has been 1.5 million shares per day over the past 30 days. Trulia has a market cap of $1.9 billion and is part of the technology sector and internet industry. Shares are up 41.6% 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 Trulia as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 Internet Software & Services industry. The net income has significantly decreased by 640.9% when compared to the same quarter one year ago, falling from -$2.41 million to -$17.86 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Internet Software & Services industry and the overall market, TRULIA INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$0.82 million or 117.73% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • TRULIA INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, TRULIA INC reported poor results of -$0.50 versus -$0.12 in the prior year. This year, the market expects an improvement in earnings (-$0.27 versus -$0.50).
  • In its most recent trading session, TRLA has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.

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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