Trade-Ideas: Whole Foods Market (WFM) Is Today's Strong 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 Whole Foods Market ( WFM) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Whole Foods Market as such a stock due to the following factors:

  • WFM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $201.4 million.
  • WFM has traded 1.3 million shares today.
  • WFM is trading at 5.73 times the normal volume for the stock at this time of day.
  • WFM is trading at a new high 5.01% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 WFM:

Whole Foods Market, Inc. operates as a retailer of natural and organic foods. The stock currently has a dividend yield of 1.3%. WFM has a PE ratio of 24.6. Currently there are 10 analysts that rate Whole Foods Market a buy, 1 analyst rates it a sell, and 13 rate it a hold.

The average volume for Whole Foods Market has been 6.2 million shares per day over the past 30 days. Whole Foods Market has a market cap of $13.6 billion and is part of the services sector and retail industry. The stock has a beta of 0.83 and a short float of 10.2% with 7.51 days to cover. Shares are down 35% 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 Whole Foods Market as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 3.1%. Since the same quarter one year prior, revenues rose by 10.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • WHOLE FOODS MARKET INC has improved earnings per share by 7.9% 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, WHOLE FOODS MARKET INC increased its bottom line by earning $1.47 versus $1.26 in the prior year. This year, the market expects an improvement in earnings ($1.53 versus $1.47).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Food & Staples Retailing industry average. The net income increased by 6.3% when compared to the same quarter one year prior, going from $142.00 million to $151.00 million.
  • Net operating cash flow has slightly increased to $240.00 million or 5.26% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -14.73%.
  • WFM's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.89 is somewhat weak and could be cause for future problems.

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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