Strong On High Relative Volume: Knightsbridge Shipping (VLCCF)

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 Knightsbridge Shipping ( VLCCF) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Knightsbridge Shipping as such a stock due to the following factors:

  • VLCCF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $7.4 million.
  • VLCCF has traded 375,054 shares today.
  • VLCCF is trading at 5.52 times the normal volume for the stock at this time of day.
  • VLCCF is trading at a new high 5.08% 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 VLCCF:

Knightsbridge Tankers Limited, a shipping company, is engaged in the seaborne transportation of dry bulk cargoes worldwide. As of May 09, 2014, it owned and operated a fleet of five Capesize dry bulk carriers. The company was founded in 1996 and is based in Hamilton, Bermuda. The stock currently has a dividend yield of 10.2%. VLCCF has a PE ratio of 56.1. Currently there are 2 analysts that rate Knightsbridge Shipping a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Knightsbridge Shipping has been 697,900 shares per day over the past 30 days. Knightsbridge Shipping has a market cap of $385.6 million and is part of the services sector and transportation industry. The stock has a beta of 1.51 and a short float of 9.3% with 3.03 days to cover. Shares are down 18.6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Knightsbridge Shipping as a hold. 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 and compelling growth in net income. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:
  • VLCCF's very impressive revenue growth greatly exceeded the industry average of 10.7%. Since the same quarter one year prior, revenues leaped by 168.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • VLCCF's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • KNIGHTSBRIDGE TANKERS LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, KNIGHTSBRIDGE TANKERS LTD reported lower earnings of $0.11 versus $0.25 in the prior year. This year, the market expects an improvement in earnings ($0.25 versus $0.11).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Marine industry and the overall market on the basis of return on equity, KNIGHTSBRIDGE TANKERS LTD underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • VLCCF has underperformed the S&P 500 Index, declining 8.14% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

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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