Noranda Aluminum (NOR) Weak On High Volume

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 Noranda Aluminum ( NOR) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Noranda Aluminum as such a stock due to the following factors:

  • NOR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.0 million.
  • NOR has traded 101,304 shares today.
  • NOR is trading at 2.52 times the normal volume for the stock at this time of day.
  • NOR is trading at a new low 6.12% 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 NOR:

Noranda Aluminum Holding Corporation produces and sells primary aluminum and rolled aluminum coils in the United States. The company's Bauxite segment mines, produces, and sells bauxite used for alumina production. The stock currently has a dividend yield of 1%. Currently there is 1 analyst that rates Noranda Aluminum a buy, 2 analysts rate it a sell, and 1 rates it a hold.

The average volume for Noranda Aluminum has been 932,500 shares per day over the past 30 days. Noranda Aluminum has a market cap of $272.7 million and is part of the basic materials sector and metals & mining industry. The stock has a beta of 1.70 and a short float of 4.5% with 2.76 days to cover. Shares are up 34% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Noranda Aluminum as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 5.57 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, NOR maintains a poor quick ratio of 0.76, which illustrates the inability to avoid short-term cash problems.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Metals & Mining industry and the overall market, NORANDA ALUMINUM HOLDING CP'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 $2.30 million or 86.30% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The gross profit margin for NORANDA ALUMINUM HOLDING CP is currently extremely low, coming in at 12.37%. Regardless of NOR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, NOR's net profit margin of -2.19% significantly underperformed when compared to the industry average.
  • NOR, with its decline in revenue, slightly underperformed the industry average of 0.2%. Since the same quarter one year prior, revenues slightly dropped by 1.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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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