KAR Auction Services (KAR) Is Today's Strong On High 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 KAR Auction Services ( KAR) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified KAR Auction Services as such a stock due to the following factors:

  • KAR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $34.3 million.
  • KAR has traded 104,971 shares today.
  • KAR is trading at 2.62 times the normal volume for the stock at this time of day.
  • KAR is trading at a new high 9.08% 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 KAR:

KAR Auction Services, Inc., together with its subsidiaries, provides vehicle auction services in North America. It operates in three segments: ADESA Auctions, IAA, and AFC. The stock currently has a dividend yield of 3.3%. KAR has a PE ratio of 56.4. Currently there are 6 analysts that rate KAR Auction Services a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for KAR Auction Services has been 989,700 shares per day over the past 30 days. KAR Auction Services has a market cap of $4.3 billion and is part of the services sector and specialty retail industry. The stock has a beta of 1.75 and a short float of 0.8% with 0.93 days to cover. Shares are up 2.2% year-to-date as of the close of trading on Tuesday.

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 KAR Auction Services as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins, growth in earnings per share and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • KAR's revenue growth has slightly outpaced the industry average of 7.9%. Since the same quarter one year prior, revenues slightly increased by 8.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has slightly increased to $139.10 million or 5.21% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -11.73%.
  • 45.00% is the gross profit margin for KAR AUCTION SERVICES INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 8.67% trails the industry average.
  • KAR AUCTION SERVICES INC 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, KAR AUCTION SERVICES INC reported lower earnings of $0.48 versus $0.66 in the prior year. This year, the market expects an improvement in earnings ($1.44 versus $0.48).

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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