Trade-Ideas: YY Inc ADR (YY) Is Today's Weak On High Relative 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 YY Inc ADR ( YY) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified YY Inc ADR as such a stock due to the following factors:

  • YY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $149.0 million.
  • YY has traded 414,618 shares today.
  • YY is trading at 2.20 times the normal volume for the stock at this time of day.
  • YY is trading at a new low 3.01% 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 YY:

YY Inc., through its subsidiaries, operates an online social platform in the People's Republic of China. YY has a PE ratio of 59.5. Currently there are 6 analysts that rate YY Inc ADR a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for YY Inc ADR has been 1.6 million shares per day over the past 30 days. YY Inc ADR has a market cap of $4.5 billion and is part of the technology sector and internet industry. Shares are up 58.2% year-to-date as of the close of trading on Wednesday.

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 YY Inc ADR as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.

Highlights from the ratings report include:
  • YY's very impressive revenue growth greatly exceeded the industry average of 27.7%. Since the same quarter one year prior, revenues leaped by 107.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • YY INC -ADR reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, YY INC -ADR increased its bottom line by earning $1.34 versus $0.21 in the prior year. This year, the market expects an improvement in earnings ($2.88 versus $1.34).
  • Powered by its strong earnings growth of 116.66% and other important driving factors, this stock has surged by 62.71% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • YY's debt-to-equity ratio of 0.92 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 5.91 is very high and demonstrates very strong liquidity.

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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