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

  • GTE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $8.1 million.
  • GTE has traded 76,195 shares today.
  • GTE is trading at 2.38 times the normal volume for the stock at this time of day.
  • GTE is trading at a new low 5.00% 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 GTE:

Gran Tierra Energy Inc., an independent energy company, is engaged in the acquisition, exploration, development, and production of oil and gas properties in Colombia, Peru, and Brazil. GTE has a PE ratio of 14.4. Currently there are 5 analysts that rate Gran Tierra Energy a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Gran Tierra Energy has been 1.2 million shares per day over the past 30 days. Gran Tierra Energy has a market cap of $1.3 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.70 and a short float of 0.2% with 0.32 days to cover. Shares are down 33% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Gran Tierra Energy as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • GTE has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.68, which clearly demonstrates the ability to cover short-term cash needs.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 2.7%. Since the same quarter one year prior, revenues slightly dropped by 1.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Net operating cash flow has significantly decreased to -$12.27 million or 108.82% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, GRAN TIERRA ENERGY INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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