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 American Equity Investment Life ( AEL) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified American Equity Investment Life as such a stock due to the following factors:

  • AEL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $8.6 million.
  • AEL has traded 250,338 shares today.
  • AEL is trading at 10.79 times the normal volume for the stock at this time of day.
  • AEL is trading at a new high 4.11% 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 AEL:

American Equity Investment Life Holding Company, through its subsidiaries, operates in the insurance business in 50 states and the District of Columbia. It underwrites fixed annuities, including fixed index annuities and fixed rate annuities, as well as single premium immediate annuities. The stock currently has a dividend yield of 0.8%. AEL has a PE ratio of 14.4. Currently there are 2 analysts that rate American Equity Investment Life a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for American Equity Investment Life has been 289,300 shares per day over the past 30 days. American Equity Investment Life has a market cap of $1.6 billion and is part of the financial sector and insurance industry. The stock has a beta of 2.00 and a short float of 7.4% with 13.36 days to cover. Shares are down 18.9% 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 American Equity Investment Life as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • AEL's very impressive revenue growth exceeded the industry average of 25.1%. Since the same quarter one year prior, revenues leaped by 51.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 185.42% to $347.22 million when compared to the same quarter last year. In addition, AMERICAN EQTY INVT LIFE HLDG has also vastly surpassed the industry average cash flow growth rate of 6.46%.
  • Despite currently having a low debt-to-equity ratio of 0.38, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.
  • In its most recent trading session, AEL 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, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • AMERICAN EQTY INVT LIFE HLDG 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, AMERICAN EQTY INVT LIFE HLDG increased its bottom line by earning $3.48 versus $0.88 in the prior year. For the next year, the market is expecting a contraction of 44.0% in earnings ($1.95 versus $3.48).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.